Crude oil jumped 5% on Monday after President Trump announced a sweeping new policy to control the Strait of Hormuz and collect tolls from foreign vessels, reigniting fears of sustained energy price inflation and triggering sharp losses across global stock markets.
Brent crude climbed to $79.37 a barrel as Trump declared the US would charge a 20% toll on eligible cargo transiting the strategic waterway to pay for "providing safety and security to this very volatile section of the world." The president said Iranian ships would be barred from the strait entirely and that the arrangement would "begin immediately," proclaiming America "THE GUARDIAN OF THE HORMUZ STRAIT" in a social media post.
The blockade came as the US and Iran exchanged military strikes over the weekend, escalating an already volatile standoff over one of the world's most critical shipping lanes. The Strait of Hormuz handles roughly a fifth of global oil supply, and any disruption ripples instantly through energy markets and beyond.
Wall Street and international bourses reacted sharply to the news. US stock indexes fell in early afternoon trading, with the tech-heavy Nasdaq down 1% and the S&P 500 declining 0.4%. Asian markets had already suffered heavier losses, as South Korea's Kospi plunged 8%, while Japan's Nikkei 225 and China's Shanghai Composite each fell 2%. Semiconductor stocks took the hardest hit: South Korea's SK Hynix sank 15%, and Samsung Electronics dropped 10%.
US Central Command said it conducted strikes on Sunday evening "to continue degrading their ability to attack civilian mariners and commercial ships freely transiting the strait of Hormuz," noting that Trump "has directed the strikes to hold Iranian forces accountable." Iran retaliated with its own attacks, part of an escalating cycle that threatens to unravel a fragile interim truce between Washington and Tehran signed last month.
Data from analyst Kpler showed vessel traffic collapsing. Only six ships crossed the strait on Sunday, the lowest count in five weeks. Among those exiting were the very large crude carrier Humanity, loaded with 2 million barrels of Iranian oil, and the Capetan Andreas carrying roughly 500,000 barrels of Kuwaiti oil products. Iran's Islamic Revolutionary Guard Corps reported it shut down the systems of two vessels on Sunday to prevent unauthorized transits, though it did not identify the ships.
The blockade threatens to deepen an already fragile energy market. Oil traded at $72.48 a barrel before late February strikes on Tehran, peaked at $120 in April, and has oscillated wildly with each round of escalation. Goldman Sachs analysts warned that "recent attacks highlight how uncertain Gulf exports remain and that a serious re-escalation could re-intensify the short-run upside risk to oil prices."
Gold fell 1.4% to $4,083 an ounce as higher oil prices rekindled inflation concerns and the prospect of higher interest rates, making the non-yielding metal less attractive. Oil prices later pared some gains after the OPEC cartel downgraded its 2026 global demand forecast to 780,000 barrels a day from 970,000 barrels, marking the third straight cut. The International Energy Agency, however, projects an even steeper demand decline of 1 million barrels a day in 2026.
Author James Rodriguez: "Trump's grab for Hormuz control and the Iranian retaliation create the worst possible scenario for markets: supply shock meets geopolitical chaos with no off-ramp in sight."
Comments