Oil prices experienced a significant surge on Monday following a statement from President Donald Trump that the United States would reinstate a maritime blockade on Iran, as tensions escalate between Tehran and Washington over control of the Strait of Hormuz.
Brent crude futures climbed 9.6% to settle at $83.30 per barrel, recording their most substantial single-day percentage increase since May 2020. West Texas Intermediate crude futures rose 9.4% to settle at $78.14 per barrel.
In a post on his social media platform, Trump announced, "We are reimposing the 'Iran Blockade,' so named because it only blocks Iranian vessels or clients from entering or leaving. All other nations will have fair and open use of the Strait."
The President stated that the U.S. would safeguard passage through the Strait of Hormuz but would require a compensation fee equivalent to 20% of the cargo value from all freight. The decision to reinstate the blockade comes after mutual attacks between the U.S. and Iran over the weekend.
According to U.S. Central Command, American forces conducted a new round of airstrikes on Iran on Sunday, following strikes on 140 targets on Saturday. These airstrikes were in response to attacks by Iran's Islamic Revolutionary Guard Corps on a container ship transiting the Strait of Hormuz.
Iran responded on Sunday by targeting U.S. military facilities in Jordan, Kuwait, Bahrain, and Oman, as reported by the Iranian state news agency Tasnim.
Iranian state media claimed the Revolutionary Guard had closed the Strait of Hormuz until further notice, a statement contested by U.S. military officials. Central Command asserted that the strait remains open to "all vessels wishing to transit lawfully."
In a Sunday social media post, Central Command stated, "Despite Iran's unprovoked aggression, harassment, threats, and arbitrary statements, U.S. forces are postured and ready to ensure freedom of navigation is unaffected. Iran does not control the Strait. Transit is continuing."
During an NBC News interview aired on Sunday, President Trump confirmed the Strait of Hormuz is open. Maritime intelligence firm Windward tracked nine vessels transiting the strait on Saturday.
The U.S.-led Combined Maritime Information Center, based in Bahrain, indicated that the southern route through Omani waters remains open for inbound and outbound traffic. However, the center noted in a Sunday advisory that the security situation in the Strait of Hormuz remains severe, advising mariners to maintain a "heightened state of vigilance."
The weekend airstrikes represent the fourth U.S. bombing of Iran within the past week, retaliating for Iranian attacks on commercial vessels under U.S. military protection transiting the southern corridor of the Strait of Hormuz.
Iran has demanded that vessels use the northern route through its territorial waters, asserting its control over the strait.
The latest escalation stems from differing interpretations between the U.S. and Iran regarding how the Strait of Hormuz should be reopened, as outlined in a provisional peace agreement signed on June 17.
Prior to the U.S.-Israel strike on Iran on February 28, approximately 20% of the world's oil supply transited the Strait of Hormuz. Transit volumes plummeted after Iran began attacking vessels in the strait in early March but have partially recovered following the signing of a provisional agreement between Washington and Tehran.
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