Oil prices jumped above $100 a barrel on Monday as the U.S. Navy prepared to block ships from reaching Iran via the Strait of Hormuz, a move that could restrict Iranian oil exports, after Washington and Tehran failed to reach a deal to end the war.
Brent crude futures rose $6.71, or 7.05%, to $101.91 a barrel by 0104 GMT after settling 0.75% lower on Friday.
U.S. West Texas Intermediate was at $104.16 a barrel, up $7.59, or 7.86%, following a 1.33% loss in the previous session.
“The market is now largely back to conditions before the ceasefire, except now the U.S. will block the remaining up to 2 million barrels per day Iranian linked flows through the Strait of Hormuz as well,” said Saul Kavonic, head of energy research at MST Marquee.
President Donald Trump said on Sunday the U.S. Navy would start blockading the Strait of Hormuz, raising the stakes after marathon talks with Iran failed to reach a deal to end the war, jeopardising a fragile two-week ceasefire.
He added that the price of oil and gasoline may remain high through November’s midterm elections, a rare acknowledgement of the potential political fallout from his decision to attack Iran six weeks ago.
U.S. Central Command said U.S. forces would begin implementing the blockade of all maritime traffic entering and exiting Iranian ports at 10 a.m. ET (1400 GMT) on Monday.
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,” a CENTCOM statement on X said.
U.S. forces would not impede freedom of navigation for vessels transiting the Strait of Hormuz to and from non-Iranian ports, it added.
IG market analyst Tony Sycamore said the move would effectively choke off the flow of Iranian oil, forcing Tehran’s allies and customers to apply the necessary pressure to get the waterway reopened.
Iran’s Revolutionary Guards said on Sunday that any military vessels attempting to approach the Strait of Hormuz would be considered a violation of the two-week U.S. ceasefire and be dealt with harshly and decisively.