Oil prices surge after Trump announces Hormuz blockade
Photo: Oil prices surge after collapse of US-Iran talks (Getty Images)
Oil prices jumped by more than 7% and crossed the $100-per-barrel mark after peace talks between the United States and Iran collapsed, according to Axios.
What happened to prices
Brent crude rose by more than $7 to $102.29 per barrel. US West Texas Intermediate (WTI) increased by about $8, reaching $104.56 per barrel.
According to Axios, traders largely ignored last week’s ceasefire agreement, believing it would not restore the flow of large tankers through the Strait of Hormuz.
Why the strait became key
Iran has effectively turned the Strait of Hormuz into a pressure lever by imposing fees and restricting oil transit. A significant share of global oil exports passes through this narrow route.
The blockade announced by Donald Trump is intended to change this situation. US vessels will intercept ships that have paid Iran transit fees.
What analysts say
"Given the continued threat of Iranian attack against any ships that don't pay the toll, the US blockade announcement will further discourage shipping through the strait, keeping volumes below 10% of the prewar level and putting continued pressure on oil prices", analysts at Eurasia Group said.
Helima Croft of RBC Capital Markets added that Donald Trump may be counting on China to take a more active role in negotiations if Iranian oil supplies to its refineries are cut off.
Possible scenarios
If Donald Trump follows through on the blockade, Tehran could escalate attacks on regional energy infrastructure.
For US consumers, the outlook is also grim. Regular gasoline is already averaging $4.13 per gallon (3.78 liters), with no significant price drop expected soon.
Outcome of US-Iran talks in Pakistan
On April 11, the United States and Iran held talks in Pakistan over Tehran’s nuclear program, but they ended without agreement as Iran rejected US demands.
Following the collapse, Donald Trump announced a naval blockade of the Strait of Hormuz. US ships will intercept all vessels that pay Iran transit fees.
Trump also warned that if Iranian forces attack US ships, the United States would “send Iranians to hell.”
Tehran responded sharply. Iranian parliament speaker Mohammad Bagher Ghalibaf said that people would soon look back nostalgically at gasoline priced at $4–5.
