Key Points
Multiple vessels were attacked while transiting the Strait, bringing Gulf shipping to another halt. A two-week ceasefire agreement expires on Tuesday, with the potential for a new round of US-Iran talks in Pakistan later this week being crucial for the situation's direction. Even if an agreement is reached, it could take months to compensate for the supply losses caused by the Strait's closure in recent weeks, suggesting oil prices will remain elevated for an extended period.
March 11, 2026, UAE - A view of the Gulf near the Strait of Hormuz, captured from the north of Ras Al Khaimah. The conflict between the US-Israel alliance and Iran has entered its 50th day, with ongoing disruptions to shipping in the Gulf casting a shadow over a fragile ceasefire set to expire this week and leading to a renewed escalation of tensions.
Following a turbulent weekend, US President Trump stated that US and Iranian negotiators would resume talks on Monday in Islamabad, Pakistan. However, reports indicate that Iranian Foreign Ministry spokesman Esmail Baghaei said, "There are currently no plans for a second round of talks with the American side." The two-week ceasefire is due to expire on Tuesday.
Last Friday, Iran announced the full reopening of the Strait of Hormuz to commercial shipping, causing crude oil prices to plummet by over 10%. But by Saturday, hopes for a full reopening were dashed as Tehran reassumed control of the strategic waterway after Trump refused to lift the US naval blockade of Iranian ports.
Shipping briefly resumed in the Strait on Saturday but quickly stalled again, with multiple vessels attacked during transit and forced to turn back.
On Sunday, the US Navy opened fire and seized an Iranian container ship in the Gulf of Oman. Trump described Iran's actions over the weekend as a "complete violation" of the ceasefire and again threatened to strike Iranian power plants and bridges if Tehran refused to reach a deal.
For markets, the events serve as a stark reminder of the fragility of the two-week ceasefire and that a deal to permanently end the war remains distant.
On Monday, as the US-Iran conflict teetered on the brink of reigniting, US stock index futures fell and crude oil prices surged. Shortly after midnight ET Monday, US West Texas Intermediate crude futures rose over 6% to $89 per barrel, while the international benchmark Brent crude climbed 5.6% to $95.50 per barrel.
"Saturday was the most violent day in the Strait since the crisis began, and there are currently no signs of improvement," said Rory Johnstone, founder of the commodities research firm Commodity Context.
"We keep seeing markets sell off, thinking we're finally going to get the ball – and then Lucy pulls it away, and we're back to square one," Johnstone said in an interview with CNBC's 'Squawk Box Asia' on Monday.
"The Strait is still not navigable, and 13 million barrels per day of oil capacity remains shut in. For every day the impasse continues, we lose a day of supply," added Johnstone, who is also a lecturer at the University of Toronto's Munk School of Global Affairs and Public Policy.
The Best Realistic Outcome
With the ceasefire expiring on Tuesday, the key question is whether the US and Iran will hold a second round of talks in Pakistan later this week.
Tehran has previously accused Washington of making "excessive demands, unrealistic expectations, and inconsistent positions," and of violating the ceasefire by maintaining the port blockade.
The first round of US-Iran talks on April 12, between US Vice President JD Vance and Iranian Foreign Minister Araghchi, concluded without any agreement. Reports indicated the US proposed a 20-year suspension of Iranian uranium enrichment, which was rejected by Iran, which insisted on a maximum of five years.
"Unless the US negotiating team abandons the mistaken belief that military victory equals strategic dominance, we cannot find a solution," said Alan Eyre, Distinguished Diplomatic Fellow at the Middle East Institute and a former member of the US negotiating team for the 2015 Iran nuclear deal.
Eyre stated that the deep-seated differences between the US and Iran extend far beyond the current deadlock. "The American side isn't truly focused on the negotiations themselves; they have been waiting for Iran to surrender," Eyre said. "Unless the US negotiating team abandons the mistaken belief that military victory equals strategic dominance, we cannot find a solution."
Eyre warned that the latest clashes could lead to further short-term escalation. "Both sides have an inclination to escalate, potentially returning to hot war, which nobody wants."
He added that while productive talks in Islamabad are still possible, "unfortunately, the opposite is more likely – a resumption of hostilities."
High-Stakes Gambit
The economic cost of the conflict continues to rise as the Strait of Hormuz, which handles roughly one-fifth of global oil supply, remains effectively closed for nearly two months.
"At the core of this crisis is the loss of time and capacity," said Johnstone, who estimates daily supply disruptions at approximately 13 million barrels of crude oil, condensate, and natural gas liquids.
"Cumulative losses have exceeded 500 million barrels," he warned, noting that even an immediate announcement of a deal would not instantly recover these losses.
Experts warn that even with an agreement, compensating for the supply losses from the Strait's closure in recent weeks could take months, meaning oil prices will stay higher for longer.
"If the Strait truly reopens, speculative hot money could cause an immediate price crash of $10 to $20 per barrel. But ultimately, after an initial plunge, prices would likely rise again – potentially into the $80 to $90 per barrel range – to reflect the ongoing oil supply shortage."
According to London Stock Exchange Group data, crude prices have surged over 30% since the war began, with Brent briefly surpassing $110 per barrel for the first time in nearly four years before retreating on expectations of a diplomatic breakthrough.
Data from Kpler shows over 500 million barrels of crude and condensate have been removed from the global market – the largest energy supply disruption in modern history.
Despite the severe energy disruption, US stock markets have overall shown resilience, with investors viewing the conflict as a temporary issue likely to be resolved relatively quickly.
However, Vasu Varathan, Head of Macro Research at Mizuho Bank, warned that such optimism may be premature. "We cannot be overly optimistic about any signed agreement too soon, because the lingering negative effects mean we cannot get out of this predicament quickly."
The International Monetary Fund warned on Tuesday that even if the ceasefire holds, global growth will inevitably be impacted – continued uncertainty around the Strait of Hormuz is dragging on the economy, pushing up energy costs and inflation.
"Clearly, we cannot return to a 'Goldilocks state' of stable growth and mild inflation," said Brian Arthurs, Portfolio Manager at Fiduciary Asset Management. He stated that the longer the Strait remains closed, the greater the risk to the global economy, although the actual extent of the damage "changes daily, weekly."
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