The price of oil surged 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.
U.S. crude oil soared 5%, to more than $102 per barrel. International Brent oil jumped more than 5%, to $100 per barrel. Wholesale gas prices also spiked 3%, while heating oil, a proxy for jet fuel prices, jumped 7%.
Stock futures had declined overnight, but by mid-morning major indexes were about flat. The S&P 500 was trading fractionally lower, the Nasdaq Composite fell 0.2%, and the Dow Jones Industrial Average tumbled more than 275 points.
The fact that stocks haven't fallen farther underscores how the market has continued to cling to hope that the war will somehow be diffused in the near-term.
“‘Less bad’ news flow is good enough,” wrote HSBC chief multi-asset strategist Max Kettner 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 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 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 on Feb. 28, fewer than 10 ships a day have been able 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 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, only 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 or 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," said Trump.
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% 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," said Chris Turner, global head of markets at ING.
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."
