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

Energy markets in Asia reopened on Monday, with oil prices climbing past $100 per barrel as the US and Iran’s peace discussions collapsed without a new agreement. President Donald Trump announced plans to impose a blockade on Iranian ports, signaling a shift in the geopolitical dynamics of the region. Global benchmarks showed significant gains: Brent crude rose 7.3% to $102.30 (£76.32), while West Texas Intermediate increased by 8.7% to $104.94.

Analysts warn that the breakdown in talks could worsen the ongoing global energy crisis. The previous ceasefire, agreed upon last Wednesday, had temporarily eased tensions, but its conditional nature left room for uncertainty. Since the conflict began on 28 February, oil shipments through the Strait of Hormuz have been disrupted, though some nations like India and Malaysia secured safe passage for their vessels.

Trading in the Strait of Hormuz, a vital route for a fifth of the world’s energy, has become a critical issue. After Tehran retaliated against US-Israeli strikes, it threatened to target ships using the waterway, escalating tensions. The US Central Command (Centcom) confirmed the blockade will begin at 10:00 ET (14:00 GMT) on Monday, targeting vessels entering or leaving Iranian ports. It will apply “impartially” to ships of all nations, while allowing free passage for those heading to non-Iranian ports.

“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,” said Chua Yeow Hwee, an economist from Singapore’s Nanyang Technological University.

Asian stock markets also faced declines, with the Nikkei 225 in Japan falling 0.7% and South Korea’s Kospi dropping 1%. The region is particularly vulnerable due to its reliance on Middle Eastern oil supplies. US stock futures pointed to a weaker start for Wall Street, reflecting broader market anxieties.

Analyst Saul Kavonic of MST Marquee noted that oil prices have “rewound” to levels seen before the recent ceasefire announcement. “The truth is, oil prices are not as high as they normally would be,” he explained, “given the scale of disruption to supplies. Traders still hope shipments will resume soon, but if that doesn’t happen, prices will continue to rise.”

Trump’s blockade threat, posted on Truth Social, emphasized the US stance: “BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz.” The Iranian parliamentary speaker, Mohammad Bagher Ghalibaf, who led negotiations in Pakistan, stated the country “will not submit to any threat,” as reported by local media. The Islamic Revolutionary Guard Corps (IRGC) Naval Forces warned that any military vessels approaching the strait would be seen as violating the ceasefire and “dealt with severely.”