Global energy markets were jolted on Monday as oil prices surged past $100 per barrel following the collapse of high-stakes negotiations between the United States and Iran and Washington’s announcement of a blockade targeting Iranian ports through the Strait of Hormuz.
Benchmark crude prices rose sharply in early Asian trade, with West Texas Intermediate (WTI) climbing over 9% to $105.30 per barrel, while Brent crude gained more than 8% to reach $103.30 per barrel. The spike comes amid escalating geopolitical tensions in the Middle East, threatening already fragile supply chains.
The sharp rally in oil prices was largely triggered by US President Donald Trump’s decision to impose a naval blockade on maritime traffic linked to Iran. The US Central Command (CENTCOM) said the blockade would come into effect at 10 a.m. Eastern Time on Monday and would target vessels entering or exiting Iranian ports across the Arabian Gulf and the Gulf of Oman.
While the US clarified that ships transiting the Strait of Hormuz to non-Iranian destinations would not be obstructed, President Trump warned that any vessel paying “illegal tolls” to Iran would face interception. He also signaled a tougher military stance, including the removal of naval mines in the strategic waterway, which handles nearly 20% of global energy supplies.
The announcement followed the failure of crucial talks held in Islamabad over the weekend, the first direct engagement between the US and Iran in over a decade. The negotiations, aimed at extending a fragile two-week ceasefire after weeks of conflict, broke down primarily over disagreements related to Iran’s nuclear enrichment program and regional security issues.
Iran rejected US demands to halt uranium enrichment, dismantle key nuclear facilities, and withdraw support for regional militant groups. In response, Iranian officials warned that any foreign military presence near the Strait of Hormuz would be treated as a violation of the ceasefire, raising fears of renewed attacks on energy infrastructure.
Market participants reacted swiftly to the developments. Oil tankers began avoiding the Strait of Hormuz ahead of the blockade. Several vessels altered their routes or halted operations, reflecting growing concerns over safety and supply disruptions.
Analysts estimate that the blockade could remove between 1.5 to 1.7 million barrels per day of Iranian crude from global markets. This potential supply loss comes on top of recent disruptions in the region, including attacks that temporarily reduced Saudi Arabia’s oil production capacity and pipeline flows.
LNG prices surge 80% since February
Beyond crude oil, the ongoing conflict has also sent shockwaves through the global liquefied natural gas (LNG) market. Industry experts warn of a deepening supply chain crisis after key infrastructure in the Gulf region was damaged during recent hostilities. LNG prices have reportedly surged by nearly 80% since late February, despite overall supply remaining adequate.
Qatar, one of the world’s largest LNG exporters, declared force majeure on several contracts after its energy infrastructure was hit, raising concerns over long-term supply reliability. The disruption has forced several Asian economies to reassess their energy strategies, with some countries shifting back to coal amid rising gas prices.
Experts caution that prolonged geopolitical tensions could keep energy prices elevated, adding to global inflationary pressures and complicating economic recovery. While diplomatic efforts may continue, markets appear increasingly sensitive to actual supply disruptions rather than political statements.
With tensions showing no signs of easing and critical energy routes under threat, the global energy landscape is entering a period of heightened uncertainty, with significant implications for economies worldwide.