On Monday, oil quotations climbed following the pronouncement by US military forces regarding the initiation of a naval quarantine encompassing Iranian harbors situated in the Strait of Hormuz—a maneuver that could place the current ceasefire under duress while simultaneously intensifying global crude supply constraints.
Brent crude, the international benchmark for oil, experienced a rise of 7%, reaching $102 per barrel, marking a 40% appreciation since hostilities commenced. WTI, the American benchmark index, ascended by 7.8% to $104 a barrel, signifying an increase of over 50% from levels seen before the conflict effectively rendered the Strait of Hormuz impassable.
The US Central Command, operating under the Department of Defense, announced on Sunday that naval assets would commence blocking “all maritime traffic entering and exiting Iranian ports” starting Monday at 10:00 AM Eastern Time. “CENTCOM forces will not impede the freedom of navigation for vessels transiting the Strait of Hormuz to and from non-Iranian ports,” the statement further clarified.
This maritime interdiction, which mirrors a threat previously issued by President Donald Trump, comes in the wake of the US and Iran failing to reach an accord on terms for hostilities cessation during weekend negotiations. Tehran, which has reportedly levied tariffs on certain vessels attempting passage through the Strait of Hormuz, has vowed retaliation against any military vessels present in the strait.
Meanwhile, Iranian Parliament Speaker Mohammad Bagher Ghalibaf asserted on X Monday that the “so-called blockade” would shortly induce “nostalgia for $4–$5 gasoline” among Americans.
The US action “risks creating novel points of friction” within the ongoing conflict, noted Neil Shearing, Chief Economist at Capital Economics, in a communication. “Would US Navy seize allied vessels that had paid duties to Tehran? Would it target Chinese ships transiting the strait? Either scenario would imply a significant escalation,” he added.
The quarantine will also “precipitate further tightening in international oil markets,” Shearing observed. “Iran accounts for roughly 4% of worldwide supply, the majority of which is destined for China.”
By interdicting Iranian oil exports, Trump potentially curtails a significant revenue stream supporting the Iranian regime’s governmental and military efforts. Last year, Iran’s oil exports generated approximately $45 billion, equating to 13% of its Gross Domestic Product (GDP), according to Shearing’s data.
Moreover, Tehran’s oil exports have actually increased since the war began. Iranian crude shipments averaged about 1.85 million barrels per day through March, a figure approximately 100,000 barrels daily higher than the average recorded from December through February, based on insights from the data and analytics firm Kpler.
Equity markets exhibited volatility on Monday, with S&P 500, Dow, and Nasdaq futures signaling a weaker market opening. Across Asia, most major stock indices concluded trading marginally lower, and prominent European benchmarks were also trading in the red.
A notable exception was Hungary’s flagship BUX index, which surged by 3% in Budapest following national elections that resulted in the conclusion of Prime Minister Viktor Orbán’s 16-year tenure. Péter Magyar, the leader of the center-right opposition party Tisza, is poised for a decisive victory.
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