Oil prices jumped Sunday night after President Donald Trump said the US would impose a blockade of the Strait of Hormuz if peace talks with Iran fail.
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US crude oil rose 8% to more than $104 a barrel. International Brent oil jumped more than 7% to $103 a barrel. Wholesale gas prices also rose 6%, while oil, a proxy for jet fuel prices, rose 10% in early trading.
Stock futures fell sharply. Futures that indicate where the S&P 500 will trade fell 1%, Nasdaq 100 futures fell 1.3%, and Dow futures fell more than 500 points.
“Effective immediately, the United States Navy, the finest navy in the world, will begin the process of interdicting any and all vessels attempting to enter or leave the Strait of Hormuz,” Trump said. said on truth social.
“I have also directed our Navy to search for and sanction every vessel that tolls Iran in international waters,” Trump said in the post.
The Strait of Hormuz is one of the most important waterways for oil and other energy products such as liquefied natural gas. Before the war, hundreds of ships passed through here every day, carrying that energy to global markets. But on most days since the war began on February 28, fewer than 10 ships a day have passed.
“The reopening of the Strait has become the market’s most sensitive priority,” JPMorgan Chase commodity analysts said Sunday. “The last tanker that vacated Hormuz on February 28 is expected to reach its destination around April 20, marking the point when pre-closure barrels are completely depleted from the global supply chain.”
Last week, only 24 ships passed through the strait and headed out to sea. Only two ships passed through on Friday, according to S&P Global Market Intelligence data shared with NBC News. Nor were there oil or gas tankers.
Trump made the announcement early Sunday as Vice President J.D. Vance, along with Trump’s special envoy for peace Steve Witkoff and Trump’s son-in-law Jared Kushner, flew to Islamabad for talks with Iranian regime leaders amid a two-week ceasefire.
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Sailor takes long journey home from Strait of Hormuz
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The lack of any agreement to end the war or reduce tensions, as well as the threat of a blockade, sapped short-term optimism in the markets that the conflict might end soon.
“These developments underscore that the United States and Iran are headed toward prolonged tensions,” said Sarah Bianchi, chief strategist for international political affairs and public policy at investment advisory firm Evercore ISI.
Last week, oil prices fell more than 12% on hopes that the Islamabad talks would find a way for the administration to end the war. The S&P 500 is up 3.5% for the week.
The renewed surge in oil means prices for consumers are likely to continue rising. According to AAA, gas prices have already increased by more than $1.20 per gallon since the war began, to a national average of $4.12.
“Enjoy the current pump figures,” said the speaker of Iran’s parliament. Wrote on X on Sunday. “With the so-called ‘blockade,’ you’ll soon be indifferent to $4-$5 gas.”
Trump himself had said on Sunday that the price increase may continue. Asked by Fox News on Sunday morning whether prices would be lower by the time of the midterm elections, Trump responded, “I think so. It might, it might be the same, or maybe a little bit higher, but it should be around that.”
On Sunday night, US Central Command appeared to clarify Trump’s comments. said in a statement The blockade would only affect “maritime traffic entering and exiting Iranian ports”. The statement said US forces will not hinder freedom of navigation for ships transiting the Strait of Hormuz to non-Iranian ports.
Central Command said the blockade did not begin immediately, as Trump had said, but would begin at 10 a.m. on Monday.
“Trump’s move to announce a naval blockade of the Strait of Hormuz looks set to raise risk factors again this week,” said Elias Haddad, vice president of market strategy at investment bank Brown Brothers Harriman.
Haddad said the Hormuz blockade “looks more like a negotiating ploy to reset the bargaining terms of the Strait of Hormuz than a sustainable blockade.”
