Oil Price Shock: Crude oil prices jumped sharply by around 11 per cent to cross $105 per barrel after US President Trump announced a US blockade of the Strait of Hormuz, following the collapse of peace
negotiations with Iran.
WTI crude oil futures were trading around $104.25 per barrel on Monday morning, while Brent crude traded near $101 per barrel.
The United States Navy is reportedly planning to begin blocking ships attempting to pass through the Strait of Hormuz, citing Iran’s “unyielding” stance on its nuclear ambitions during recent peace talks in Islamabad.
In a post on Truth Social, Trump said, “Effective immediately, the United States Navy, the Finest in the World, will begin the process of BLOCKADING any and all Ships trying to enter or leave the Strait Of Hormuz.”
Trump also accused Iran of going back on its assurance to keep the key international waterway open. He claimed the situation had caused disruption and uncertainty for global shipping, adding that reports of mines in the waters had further raised fears among ship owners.
The Strait of Hormuz is a key international water passage, connecting the Gulf nations with the Gulf of Persia and Arabian sea. The importance of Hormuz lies in the fact that over 20 per cent of global crude oil happens through it, marking it a critical chokepoint. Any blockade and intrusion in the passage is likely to intensify the energy supply disruption across the globe, especially for countries that are dependent on it.
