Global oil prices rose 7% to above $100 per barrel as the US Navy prepared to block shipping through the Strait of Hormuz.
Points of attention
- Global oil prices have surged by 7% in response to the US Navy's preparation for a blockade of the strategic Strait of Hormuz.
- The blockade is expected to restrict the transport of oil through the crucial shipping lane, causing uncertainty and volatility in the oil market.
Oil prices are rising rapidly
Brent crude futures rose 7.05% to $101.91 a barrel. US West Texas Intermediate (WTI) crude rose 7.86% to $104.16 a barrel.
The price jump came after talks between Washington and Tehran to end the war collapsed. US President Donald Trump announced the start of a naval blockade and acknowledged that fuel prices could remain high until the midterm elections in November.
The market is now largely back to pre-ceasefire conditions, except that the US will now block up to 2 million more barrels of oil per day bound for Iran passing through the Strait of Hormuz, said Sol Kavonik, head of energy research at MST Marquee.
The US Central Command (CENTCOM) said the blockade will begin on Monday at 5:00 p.m. Kyiv time. The restrictions will apply to ships from all countries entering or leaving Iranian ports. The US military will not interfere with the transit of ships to ports of other countries.
Iran's Islamic Revolutionary Guard Corps has warned that the approach of foreign warships to the Strait of Hormuz will be considered a violation of the ceasefire and will be met with a tough and decisive response.
According to LSEG, most oil tankers are currently trying to bypass the Strait of Hormuz.
Meanwhile, Saudi Arabia announced on April 12 the resumption of full oil pumping through the East-West pipeline, with a volume of about 7 million barrels per day, after repairing damage to energy infrastructure from recent Iranian attacks.
