Oil back above $100 as US to blockade Iranian ports after peace talks fail
Oil back above $100 as US to blockade Iranian ports after peace talks fail
Monday saw oil prices rebound past $100 per barrel as US President Donald Trump implemented a port blockade in Iran following the collapse of peace negotiations. Brent crude, a global price benchmark, increased 7% to $102.30, while West Texas Intermediate climbed 8.7% to $104.94. This surge followed a sharp decline in oil costs last Wednesday, when the US and Iran had agreed to a conditional two-week ceasefire, including the opening of the Strait of Hormuz, a vital pathway for global energy supplies.
However, the failure of recent talks has reignited fears about the intensification of the global energy crisis. The Strait of Hormuz, through which approximately one-fifth of the world’s energy shipments travel, has become a central point of contention. After Iran retaliated against US-Israeli strikes, it warned of attacks on vessels attempting to navigate the strait, escalating tensions. Since the conflict began on 28 February, maritime traffic through the channel has been nearly halted, causing international oil prices to spike and consumer costs to rise.
Despite this, Iran has maintained its oil exports. Windward, a maritime intelligence firm, reported that over 58 million barrels of crude have departed from Kharg Island, Iran’s primary export hub, since 1 March. Of these, more than 90% have been destined for China. On Sunday, Trump declared that the US Navy would begin a blockade of vessels attempting to enter or leave the Strait of Hormuz immediately. US Central Command expanded the measure, stating it would restrict all ships at Iranian ports and coastal areas from 10:00 EST (15:00 BST) on Monday, excluding those transiting the strait to non-Iranian destinations.
“Oil prices are likely to remain elevated because expectations now depend on whether the blockade is fully implemented, whether shipping disruptions spread, and whether diplomacy resumes.”
— Chua Yeow Hwee, economist at Singapore’s Nanyang Technological University
“Oil prices are not as high as they normally would be given the scale of supply disruption. Traders still hope shipments will resume soon. But if that doesn’t happen, prices will head higher.”
— Saul Kavonic, analyst at MST Marquee
Analysts like Marcus Baker of Marsh highlighted the uncertainty surrounding the two-week ceasefire. “Will the Iranians decide to honour the deal despite US threats?” he questioned. “If they do, market confidence will likely recover, and the ceasefire’s endurance will be crucial for future stability.”
In a statement via local media, Iranian parliamentary speaker Mohammad Bagher Ghalibaf asserted that Iran would not “submit to any threat.” Meanwhile, the Islamic Revolutionary Guard Corps (IRGC) Naval Forces stated that any military vessels approaching the strait would be seen as violating the ceasefire and “dealt with severely.”
Asian stock markets experienced a dip on Monday, with Japan’s Nikkei 225 falling 0.7% and South Korea’s Kospi declining by 1%. The region has been particularly affected by the energy conflict, as it relies heavily on Middle Eastern oil supplies.
