The US began a blockade of Iranian ports last night as diplomats moved urgently to keep the ceasefire alive.
President Donald Trump said Iranian ships challenging the blockade would be “eliminated” in the same manner as drug boats in the Caribbean.
Mariners were told the blockade would cover the entire Iranian coastline. The US was expected to offer a limited grace period for neutral vessels to depart Iran.
The loss could further damage Middle East oil exports after the war wiped out 7.88 million barrels per day of Opec’s production last month.
Figures released yesterday showed Opec production fell 27 per cent last month. The supply shock passes the 6.28 million bpd cutback in May 2020, at the height of the Covid-19 pandemic, and reductions during the 1970s oil crisis and the 1991 Gulf War.
Iran stands to lose about $150 million a day in oil revenue under the US blockade, ending a windfall that had seen Tehran earn about $9 billion over 40 days of war that pushed oil prices above $100 a barrel.
“The exports will fall to zero effectively,” said Homayoun Falakshahi, head of crude oil analysis at energy data company Kpler. Iran had been shipping about 1.85 million barrels per day at prices that flipped from a discount to a premium against the Brent benchmark, as Tehran became the only major Gulf exporter able to move crude freely through the Strait of Hormuz.
Mr Trump's blockade follows US-Iran talks in Islamabad that failed to reopen the Strait of Hormuz or end the war. Pakistani Prime Minister Shehbaz Sharif said “full efforts” were still being made to resolve the conflict.
Sources told The National that Egyptian and other mediators had not left Islamabad, staying on to prepare with the Pakistanis for a possible next round of negotiations.
The sources said the US had no intention of resuming strikes against Iran while negotiations were taking place. The first round of talks in Islamabad faltered over Iran's nuclear activities and control of the Strait of Hormuz. The US Central Command said the new blockade is aimed at “vessels of all nations entering or departing Iranian ports and coastal areas”.
Mr Trump said Washington would not allow Iran to “blackmail or extort” the world. He added that Iran has called the US to ask for a deal, which Tehran wants “very badly”.
Iran was defiant. Defence Ministry spokesman Brig Gen Reza Talaei-Nik said it “will not allow any interference or aggression” in the strait. Iran will show “no hesitation in delivering a decisive and regrettable response to any aggressor”, he said.
Israel supports the US naval blockade, Prime Minister Benjamin Netanyahu said, dismissing suggestions of a “disconnect” between the Americans and Israelis. He said the US broke off peace talks in Islamabad because Iran refused to open the strait.
“The agreement was that they would cease fire and that the Iranians would immediately open the gates. They did not do that. The Americans could not accept that,” Mr Netanyahu said.
UN Secretary General Antonio Guterres on Monday warned the shipping disruptions were worsening global economic and hunger risks. “We need to remember that some 20,000 seafarers have been caught up in this conflict and are currently stranded on ships, facing increasing hardships daily,” Mr Guterres said.
He said disruptions to maritime trade through the Strait of Hormuz were already having “direct effects” far beyond the region, increasing global economic fragility and insecurity across several sectors.
Arsenio Dominguez, the head of the International Maritime Organisation, rejected Iran’s suggestions of charging a toll to pass through the Strait of Hormuz, saying it was part of a treaty guaranteeing safe passage. “Right to safe passage means that you don’t have to pay for a service,” Mr Dominguez said.
