Oil prices surged on Monday after Pakistan-brokered US-Iran talks ended in failure and US President Donald Trump announced blockading the Strait of Hormuz and intercepting vessels in international waters that had paid a toll to Iran.
Brent, the benchmark for two-thirds of the world’s oil, was up 7.41 per cent to $102.25 a barrel at 7.07am UAE time. West Texas Intermediate, the gauge for US oil, was trading 8.7 per cent higher at $104.97 a barrel.
Brent settled last week at $95.20 a barrel, while WTI finished at $96.57.
Both benchmarks fluctuated last week in headline driven trading. Brent lost more than 11 per cent and the WTI plunged by more than 14 per cent on Wednesday, after the US and Iran agreed to a two-week ceasefire just hours before Mr Trump's deadline to annihilate Iran’s civil and energy infrastructure.
Failed talks
However, the talks in Islamabad that began on Saturday failed after a marathon 21 hours of negotiations on Sunday, US Vice President JD Vance announced.
The US and Iranian delegations left the Pakistani capital the same day and there is no clarity if there will be another round of negotiations. Pakistani officials have called for further talks while the ceasefire still holds.
Hours after the talks in Islamabad collapsed, Mr Trump announced the US Navy would immediately begin blockading the Strait of Hormuz, through which 20 per cent of global oil and gas supplies pass.
“Effective immediately, the United States Navy … will begin the process of blockading any and all ships trying to enter, or leave, the Strait of Hormuz,” Mr Trump wrote on Truth Social on Sunday.
The president accused Tehran of “world extortion” and said US forces would also “seek and interdict every vessel in international waters that has paid a toll to Iran”.
The US will also begin clearing naval mines in the strait, he said, and warned that any Iranian attacks on US or commercial vessels would be met with force.
Other countries would be involved in the blockade, he added in his post, without providing details.
Brent, which hit an intraday high of almost $120 a barrel on March 19, has been extremely volatile amid the US-Israel war on Iran and Tehran’s retaliatory strikes on its Gulf neighbours.
Mr Trump's repeated threats to destroy Iranian energy infrastructure and the effective blockade of the strait have swung global energy markets.
Iran has effectively closed the strait for but a few vessels. Hundreds of tankers, LNG carriers and bulk carrying ships remain stranded in the Gulf.
On Sunday, Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and managing director and group chief executive of Adnoc, said that the Strait of Hormuz has never been Iran’s to close or restrict and it is attempting to disrupt the global economy.
The blockade of the vital waterway for global trade and energy flows is not a regional issue, “it is the disruption of a global economic lifeline and a direct threat to the energy, food and health security of every nation”, Dr Al Jaber said in a post on X.
“Setting such a precedent is illegal, dangerous and unacceptable. The world simply cannot afford it and must not allow it.”
