By Giulia Petroni
Oil prices climbed back above $100 a barrel as the U.S. prepares to block ships passing through the Strait of Hormuz to and from Iran, deepening fears of a prolonged energy shock after weekend talks broke down.
In early European trading on Monday, Brent crude gained 6.8% to $101.7 a barrel, while West Texas Intermediate rose 7.2% to $103.55 a barrel. Natural-gas prices also jumped, with the front-month Dutch TTF contract--the European benchmark--up 9% to 47.58 euros a megawatt-hour.
The reopening of the strait--fully and without tolls--was one of the main sticking points in a 21-hour round of negotiations between Washington and Tehran, but the two sides failed to reach a compromise. Roughly a fifth of global oil and liquefied natural gas supplies pass through the waterway.
"High stakes negotiations between the U.S. and Iran deadlocked over Washington's zero uranium enrichment demand, setting the stage for further escalation in the six-week war and prolonged supply disruptions in advance of summer driving season," said Helima Croft, head of global commodity strategy at RBC Capital Markets.
While Trump threatened to blockade "any and all ships trying to enter, or leave, the Strait of Hormuz," the U.S. Central Command said its forces would not impede "vessels transiting the Strait of Hormuz to and from non-Iranian ports." The action is set to begin at 1000 Eastern Time.
Trump's move could be aimed at drawing China more directly into negotiations by threatening Iranian oil flows to its refineries, Croft said. However, China's response remains uncertain, as the country has built sizable strategic oil reserves ahead of the conflict and might even benefit strategically as U.S. military resources are diverted toward the Middle East.
Kpler data shows Iranian oil moving freely through Hormuz at the end of last week, while the only non-Iranian very large crude carrier loadings were on vessels chartered by China or Thailand. Still, ships that switched off tracking systems might have crossed undetected.
Market watchers question whether the U.S. would intercept Chinese tankers that have paid Iranian transit fees, warning such steps could heighten tensions in U.S.-China relations while increasing pressure on Tehran to negotiate.
"Would the U.S. Navy seize allied ships that have paid tolls to Tehran? Would it target Chinese vessels in the Strait?" said Neil Shearing, chief economist at Capital Economics. "Either outcome would represent a significant escalation."
Traders will now focus on whether the cease-fire agreed last week holds, efforts to bring the U.S. and Iran back to the negotiating table, and how Iran reacts to Trump's Hormuz blockade--particularly any move seeking to disrupt oil shipments elsewhere in the Gulf.
A key risk is spillover to the Red Sea--a critical global shipping lane that bypasses the Strait of Hormuz--as Iran could respond by encouraging attacks from Houthi rebels on tankers. "If this happens then the price of oil could surge to fresh highs, as it would further restrict supplies of precious commodities," said Kathleen Brooks, research director at XTB.
The Red Sea has increasingly become a vital route for Saudi Arabia. In March, the country started diverting flows through the East-West pipeline, a roughly 750-mile system that carries crude from eastern oil fields and processing centers near the Gulf to the port of Yanbu on the west coast.
Over the weekend, Saudi Arabia restored "full pumping capacity" to the pipeline, now its primary crude oil export outlet, after it was hit by an Iranian attack.
Write to Giulia Petroni at giulia.petroni@wsj.com
(END) Dow Jones Newswires
April 13, 2026 04:30 ET (08:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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