Strait of Hormuz Crisis Deepens as Trump Launches Project Freedom

The United States is launching what President Donald Trump has dubbed Project Freedom, an effort to guide stranded commercial ships out of the Strait of Hormuz, more than two months into a crisis that has largely closed the world's most important oil shipping lane and pushed Canadian gasoline prices to among the highest levels in years. The announcement, made over the weekend, came as Iran's government said it is reviewing a U.S. response to a 14-point plan for a permanent end to the conflict that has rattled global energy markets since late February.

What is happening

Shipping traffic through the Strait of Hormuz has been largely blocked by Iran since February 28, 2026, when the United States and Israel launched an air war against Iran and assassinated supreme leader Ali Khamenei. Iranian Revolutionary Guard forces have issued warnings forbidding passage through the strait, boarded and attacked merchant ships, and laid sea mines that have prevented routine commercial shipping from operating safely.

The closure has had immediate effects on global oil markets. Iran's actions took roughly 14 million barrels of daily oil shipping offline at the start of the crisis, the largest single supply disruption in history. Despite expectations that prices would surge sharply, oil has been trading around $110 per barrel, with West Texas Intermediate futures recently closing near $89 and Brent crude near $95 after multiple weeks of volatility.

The Trump administration's announcement of Project Freedom is intended to break the impasse for ships that remain stranded near or within the strait. The president has said the U.S. effort will begin Monday morning Middle East time and will involve American naval assets escorting commercial ships out of the area. A separate ceasefire framework between the United States and Iran has been in flux, with Iran's review of the U.S. response to a 14-point Iranian plan now occupying the diplomatic foreground.

The Canadian impact

For Canadians, the most immediate effect of the Strait of Hormuz crisis has been at the gas pump. Canadian gasoline prices have risen by roughly 30 per cent between March and April, reflecting both the elevated global oil benchmark and refining margin pressures. Pump prices in Toronto, Montreal and Vancouver are now well above the levels seen during previous energy spikes, and rural and remote Canadian communities are paying particularly high prices.

The inflation transmission has been broader than gasoline alone. Higher fuel costs feed through to transportation of goods, agricultural inputs, food distribution and home heating in some regions, contributing to a general lift in prices that the Bank of Canada cited as a primary reason for holding its policy interest rate at 2.25 per cent on April 29. The central bank's projection still expects inflation to ease back to the 2 per cent target through 2027, but only if oil prices retreat from current levels.

For Canadian energy producers, the crisis has been more mixed. Higher prices have lifted revenue for oil sands producers and for offshore Atlantic operators, but the political environment makes it difficult for companies to capitalise fully on the windfall. Production capacity, pipeline access and refining constraints all limit how much Canadian crude can be moved into global markets, even at elevated prices. The Carney government's ongoing discussions with Alberta about potential pipeline expansion to the west coast are being shaped in part by the strategic implications of the Hormuz crisis.

The 14-point plan

Iran's government spokesperson confirmed in recent days that the United States has responded to a 14-point plan that Tehran put forward as a basis for ending the conflict. Iranian officials have said they are reviewing the U.S. response, although they have not made the contents of either the plan or the response public. Diplomatic activity around a potential ceasefire has been running in parallel to military operations, with multiple intermediaries involved in the conversations.

The plan reportedly addresses Iran's nuclear programme, regional security commitments, sanctions, prisoner exchanges and the conditions under which the Strait of Hormuz can be reopened. The combination of military, diplomatic and economic dimensions makes any agreement difficult to construct, particularly given the deep distrust between the parties and the political volatility on both sides.

European, Gulf and Asian governments have all played roles in the broader diplomatic effort, with several arguing that the global economic costs of an extended closure justify significant concessions to reach a workable framework. The current ceasefire arrangement has been described as expiring this week, raising the stakes for any new framework that emerges from the diplomacy.

The shipping reality

Project Freedom faces significant practical challenges. Insurance underwriters, shipowners, crews and their flag states have all been navigating the complex realities of operating near a strait that remains an active military zone. Even with U.S. naval escorts, ships will face risks from sea mines, drone attacks and uncertainty about the rules of engagement that apply to commercial vessels.

Several major shipping lines have rerouted vessels around the Cape of Good Hope, adding weeks to delivery schedules and increasing costs across global supply chains. Energy traders have been shifting cargoes from disrupted routes to alternatives, but global production capacity outside the Middle East cannot fully replace the volumes that historically transit the strait.

The longer the closure continues, the more entrenched alternative supply patterns become. Some analysts have argued that the Strait of Hormuz crisis is accelerating structural shifts in global energy markets, including the relative importance of pipeline-based supply, North American production and emerging non-Iranian Middle East routes.

Reaction in Canada

Federal officials have continued to engage with allies on the diplomatic and economic dimensions of the crisis. Foreign Affairs Minister Mélanie Joly has been in regular contact with European, American and Gulf counterparts, and Canada has maintained its support for the broader international effort to de-escalate the conflict and restore safe navigation through the strait.

Domestically, the Carney government has tried to balance public concern about gasoline prices with the broader strategic dimensions of the crisis. Officials have emphasised that Canada's diversified energy mix, regulated electricity sector and relatively strong domestic refining capacity offer some insulation against the most extreme global price shocks, although they acknowledge that no economy is fully immune.

Conservative leader Pierre Poilievre's office has used the crisis to argue for accelerated approval of pipeline projects and for greater Canadian production capacity. The NDP has emphasised the need for affordability supports for low-income households facing higher fuel and food costs, while the Bloc Québécois has raised concerns about the impact on Quebec's manufacturing sector and northern communities.

Provincial responses

Provincial governments have responded with varying degrees of action. Several provinces have implemented or extended targeted relief measures, particularly for low-income households and rural communities most exposed to fuel costs. Atlantic provinces, where home heating oil remains a significant share of household energy use, have been particularly active in pressing federal officials for additional support.

Alberta and Saskatchewan, the country's main oil-producing provinces, have used the crisis to renew arguments for expanded pipeline capacity and improved access to global markets. Premier Danielle Smith and her counterparts in other producing regions have argued that current infrastructure constraints prevent Canada from playing the strategic role that the global situation invites.

British Columbia and Quebec, both significant consumers of imported transportation fuels, have taken a more cautious posture. Both governments have prioritised consumer protection measures, transit affordability and continued investment in clean transportation alternatives that reduce long-term exposure to oil price shocks.

What's next

The Trump administration's launch of Project Freedom and Iran's review of the U.S. response to its 14-point plan will define the next several weeks of the crisis. If diplomacy yields a workable ceasefire framework, oil prices could ease, providing relief to consumers across Canada and around the world. If the conflict escalates further, prices could climb again and economic pressures intensify.

Canadian policymakers will continue to navigate the crisis through a combination of diplomatic engagement, fiscal support for affected households, dialogue with provinces on energy strategy and ongoing assessment of the inflation outlook. The Bank of Canada's June 10 interest rate decision will be a particular focus, as the central bank weighs the implications of energy-driven inflation against the broader weakness in the Canadian economy from tariffs.

For Canadians, the immediate experience of the crisis remains the price at the pump and the broader cost of living. Whether those pressures ease or intensify will depend on developments thousands of kilometres away in the Persian Gulf and on the success or failure of the diplomatic effort that is now under way.