Oil prices surged, and stocks sank on Monday after US-Iran peace talks fell apart and Donald Trump announced a blockade of the strategic Strait of Hormuz, adding to fears of energy supplies from the Middle East. The news dealt a blow to hopes for an end to the six-week conflict, which has sent crude prices soaring, pushing inflation up and sending shivers through the global economy.
Negotiations in Islamabad at the weekend fell apart with the US delegation — led by Vice President JD Vance — blaming Iran’s refusal to give up its nuclear programme and Tehran hitting out at ‘maximalism, shifting goalposts, and blockade’. According to the US Department of State, the talks were the highest-level meeting between the two sides since the 1979 Islamic revolution.
Impact on Global Economy
Oil prices — which tumbled last week after the United States and Iran agreed to a ceasefire — jumped around eight percent Monday, with both contracts topping $100 a barrel. Equities fell across Asia, with Tokyo, Hong Kong and Seoul off at least one percent, while Shanghai, Sydney, Singapore, Taipei and Jakarta were also down.
In a lengthy social media post, US President Donald Trump said his goal was to clear the strait of mines and reopen it to all shipping. But he said that Iran must not be allowed to profit from controlling the waterway — through which a fifth of global oil and gas usually passes.
Blockade Details
Effective immediately, the United States Navy, the Finest in the World, will begin the process of BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz, Trump wrote on Truth Social. Any Iranian who fires at us, or at peaceful vessels, will be BLOWN TO HELL! He said the blockade would only apply to vessels travelling to or from Iranian ports.
The US military said Sunday it will blockade all Iranian Gulf ports on Monday at 1400 GMT, effectively seizing control of maritime traffic. Iran’s Revolutionary Guards said its security forces had full control over the strait and warned enemies would be trapped in a ‘deadly vortex’ in case of any ‘wrong move’.
- Iran’s navy chief Shahram Irani called Trump’s threat ‘ridiculous and funny’, according to state TV.
- Nicole Grajewski, an assistant professor at the Center for International Research at Sciences Po in Paris, warned that a US blockade was ‘not a minor coercive signal’ but would rather be considered an effective resumption of the war.
- Fawad Razaqzada, a market analyst at Forex.com, said: ‘The fundamental issue remains trust — or rather, the lack of it — between two long-standing adversaries’.
For more information on the conflict, visit the Wikipedia page on Iran-United States relations.
