Oil prices surged back above $100 per barrel on Monday, as the U.S. Navy prepared to intercept vessels travelling to and from Iran through the Strait of Hormuz—a step that could curb Iranian oil exports, due to the failure of Washington and Tehran’s to agree on a deal aimed at ending the war.
After closing 0.75% down on Friday, Brent crude futures increased $6.52, or 6.9%, to $101.72 a barrel. After losing 1.33% in the previous session, the U.S. West Texas Intermediate was up around $7, or 7.2%, at $103.55.
After lengthy negotiations with Iran failed to produce a deal to end the war, President Donald Trump raised the stakes on Sunday by announcing that the U.S. Navy would begin blockading the Strait of Hormuz, endangering a precarious two-week ceasefire.
In a rare admission of the possible political impact from his decision to attack Iran six weeks ago, he said that the price of petrol and oil could stay high through the U.S. midterm elections in November.
”The stated U.S. blockade is an acknowledgement that the reopening of the Strait, which was the main tenet of the ceasefire, is currently unfeasible, at least according to American interpretation.,” said Erik Meyersson, analyst at Nordic bank SEB.
U.S. forces will start enforcing the blockade of all marine commerce entering and leaving Iranian ports from 10 a.m. ET (1400 GMT) on Monday, according to U.S. Central Command.
In a statement on X, CENTCOM stated that it would be “enforced impartially against vessels of all nations entering or departing Iranian ports and coastal areas, including all Iranian ports on the Arabian Gulf and Gulf of Oman”.
It further stated that U.S. soldiers would not obstruct ships travelling to and from non-Iranian ports via the Strait of Hormuz.
Tehran’s ambassador to New Delhi stated on Monday that Indian tankers passing through the Strait did not pay, despite Trump’s declaration that he would also prohibit any ships that paid Iran a toll.
Iran’s Revolutionary Guards declared on Sunday that any military ships trying to cross the Strait of Hormuz would be deemed to be in violation of the truce and would face severe and swift consequences.
Citing the effects of the Middle East conflict, the OPEC producer group reduced its projection for global oil consumption in the second quarter by 500,000 barrels per day.
Crude production from OPEC+ members averaged roughly 35.06 million barrels per day in March, a monthly decrease of 7.7 million barrels per day, according to a report published on OPEC’s website on Monday.
