Iran blockade oil prices jumped nearly 10% on Monday after the U.S. announced a total blockade of Iran and set out plans for naval escorts in the region.
WTI crude last traded at $78.27, up $6.87 on the day. That left the U.S. benchmark higher by 9.6%, according to the source report. Earlier moves had been modest, but prices climbed after the blockade announcement and after the U.S. navy gave details of the plan.
The report said the U.S. aims to pressure Iran with a full blockade. At the same time, it plans to keep oil moving by escorting ship convoys in the region and charging a 20% toll. However, the article said the market move showed doubts about whether that plan can work.
Iran Blockade Oil Prices Reflect Supply Fears
The source article said traders also faced a rising risk that Iran could strike oil facilities in nearby countries. As a result, concern about supply in the region pushed crude sharply higher. The report added that global consumers could bear the cost if the conflict turns into a long war of attrition.
Gold moved the other way. It fell by $123, the article said, on expectations that major oil importers may need to sell reserves to support their currencies or pay for oil. Meanwhile, the report said there is clear sailing for WTI until the April low of $80.52 on a technical basis.
Blockade Plan Raises Broader Market Risks
The article said the blockade followed failed efforts to end the war and restore free navigation in Hormuz. It also said Trump had bought some time by freeing ships stuck in the area. However, the report added that it was hard to see many companies returning to those shipping lanes soon.
Because of that, the article said global oil inventories would keep falling and the strain would grow. It also pointed to Tuesday’s new round of earnings and said the latest CPI report was due the next day. The source added that rising oil prices could worsen stock market pressure and lift inflation risks.
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