DTN Oil Update
Oil Prices Jump After US Instates Hormuz Blockade
VIENNA (DTN) -- Oil prices jumped more than 7% Monday morning on U.S. President Donald Trump's intent to blockade all ships sailing in and out of Iranian ports in the latest escalation to the Middle East crisis, which the U.S. military confirmed it will enforce.
Near 9:00 a.m. EDT, WTI for May delivery was up $7.27 to trade near $103.84 bbl, and Brent for June delivery rose $6.75 to $101.95 bbl.
RBOB futures for May delivery advanced by $0.1320 to $3.1693 gallon, and front-month ULSD futures added $0.3055, or 8%, to trade near $4.0671 gallon.
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The U.S. Dollar Index strengthened by 0.29 points to 98.73 against a basket of foreign currencies.
Tanker traffic through the Strait has been all but idle since the beginning of the U.S.-Israeli war on Iran on Feb. 28, effectively stranding a fifth of global petroleum liquids supply. While flows have ticked higher since last week's ceasefire announcement, they were still at less than 10% of pre-war levels. Iranian oil exports have, however, marked an exception, continuing unhindered since the start of the Feb. 27 start of the war, with the U.S. even freezing sanctions on Iranian oil to ease a global supply shock.
That Iranian supply may now be under threat too after Trump announced Sunday, April 12, that U.S. warships will block any ship entering or leaving Iranian ports. The president said the restriction also applied to any vessel which paid a toll to Iran for using the passageway. U.S. military command has since contradicted the latter claim, saying that while forces will start blockading traffic in and out of Iran at 10 a.m. EDT, they will not restrict any other vessels.
Trump's proclamation came after the White House led by Vice President JD Vance failed to strike a permanent deal with Iranian officials in talks held in Islamabad, Pakistan. Since last Tuesday, April 7, the U.S. has held to its preliminary deal of a two-week ceasefire over Iran.
Trump said the hurdle to a permanent deal with Iran was Tehran's refusal to stop nuclear enrichment. Iranian negotiators, meanwhile, said talks broke down because the U.S. did not offer sufficient security guarantees that there would not be further attacks on the country or its ally Lebanon, which had faced intense bombing since last week in an extension to the war.
Tehran also said that it considers any military vessel approaching the Strait of Hormuz a ceasefire breach and reiterated previous warnings that it may also target traffic through Bab-el-Mandeb.
Iranian proxy militias in Yemen have attacked ships traversing the chokepoint between the Arabian Peninsula and the Horn of Africa for more than two years before a ceasefire was brokered in late 2025.
Maritime traffic trackers have reported that some laden oil tankers have set sail from the Persian Gulf after being idle for six weeks.
In other oil market news, OPEC reported Monday that it expected global oil demand growth to remain steady at 1.4 million bpd for 2026, though the group revised its second-quarter forecast lower by 500,000 bpd due to "transitory weakness" from the Iran war.