The price of oil rose Monday, as a U.S. blockade of Iran’s ports and coastal areas came into effect and President Donald Trump threatened to eliminate any Iranian “fast attack ships” that approached American assets.
The price of U.S. crude oil closed higher by 2.6% to $99.08 per barrel. International Brent oil jumped 4.3% to $99.36 per barrel. Wholesale gas prices also added 2%, while heating oil, a proxy for jet fuel prices, jumped 4%.
Stocks followed a different pattern, though, and traded sharply higher throughout the day on bursts of optimism that the war will somehow be diffused in the near term.
Stocks hit their highest levels of the day after Trump said that he was “called” this morning “by the right people” in Iran. Trump added that “they” want to work on a deal, without specifying who reached out.
By the time the closing bell rang, the S&P 500 was up more than 1%. The index's Monday rally erased all of its losses since the Iran war began and put it back in positive territory for the year.
The Nasdaq composite closed higher by 1.2%, and the Dow Jones Industrial Average jumped 302 points. Both are essentially flat for the year, and the Dow remains in the red since the war began Feb. 28.
“‘Less bad’ news flow is good enough,” HSBC chief multi-asset strategist Max Kettner wrote in a Monday morning note. “We don’t need a full return to normality in order to fade the moves of the last six weeks.”
The U.S. blockade went into effect at 10 a.m. ET on Monday, but questions remained as to how it would be enforced.
In a Sunday night post announcing the blockade, Trump said he had “instructed our Navy to seek and interdict every vessel in International Waters that has paid a toll to Iran.”
The Strait of Hormuz is one of the most important waterways for oil and other energy products, such as liquefied natural gas. Before the war, hundreds of ships per day passed through it, carrying that energy to the global marketplace.
But on most days since the war began, fewer than 10 ships a day have been able to pass through.
Oil’s renewed surge means gas prices for consumers are expected to resume their rise. Already, unleaded gas prices have risen more than $1.20 per gallon since the war began, to a national average of $4.12 on Monday, according to AAA.
“Reopening the Strait has become the market’s most time-sensitive priority,” JPMorgan Chase commodities analysts wrote. “The last tanker to clear Hormuz on February 28 is expected to reach its destination around April 20, marking the point at which pre-closure barrels are fully exhausted from the global supply chain.”
Last week, just 24 ships passed through the strait out to the ocean. On Friday, only two ships passed, according to data from S&P Global Market Intelligence that was shared with NBC News. Neither were oil nor gas tankers.
In a Truth Social post Monday, Trump threatened to target what he called Iran's "fast attack ships."
"Warning:If any of these ships come anywhere close to our BLOCKADE, they will be immediately ELIMINATED, using the same system of kill that we use against the drug dealers on boats at Sea," Trump said.
Vice President JD Vance, along with Trump's special envoy for peace, Steve Witkoff, and Trump's son-in-law Jared Kushner, were in Islamabad over the weekend for talks with Iranian regime leaders, amid a two-week ceasefire. But the talks failed to reach a resolution — Iran's uranium enrichment program was cited as a key stumbling block.
Strait of Hormuz sailor makes long journey home
Last week, oil prices dropped more than 12% on hopes that the Islamabad talks would lead to an off-ramp for the administration to start winding down the war. The S&P 500 rose 3.5% that week.
Some strategists viewed the newly enacted blockade as a way for the U.S. to possibly get Iran back to the negotiating table, which many say would be a positive for markets.
"The focus now shifts to whether the naval blockade encourages another round of negotiations, whether the Iranian-backed Houthis in Yemen try to block the southern end of the Red Sea and what the likes of China make of interference in their oil imports," Chris Turner, global head of markets at ING, said.
The speaker of Iran’s parliament wrote Sunday on X: “Enjoy the current pump figures. With the so-called ‘blockade’, Soon you’ll be nostalgic for $4–$5 gas.”
Trump himself also said over the weekend that gas prices could continue to rise. Asked Sunday morning by Fox News whether the cost of fuel would be lower by November's midterm elections, he replied: "I think so. It could be, it could be or the same, or maybe a little bit higher, but it should be around the same."
