Oil prices rose back above $100 a barrel as energy markets reopened in Asia on Monday after talks between the US and Iran ended without a new deal and President Donald Trump said he would blockade Iranian ports.
Global benchmark Brent crude was up by 7.3% at $102.30 (£76.32), while West Texas Intermediate was 8.7% higher at $104.94.
The failure of negotiations at the weekend has raised concerns that the global energy crisis will deepen.
The price of oil plunged well below $100 last Wednesday after Washington and Tehran agreed to a conditional two-week ceasefire deal that includes the opening of the key Strait of Hormuz trade waterway.
The strait, through which a fifth of the world’s energy shipments pass, has become a key flashpoint of the Iran war after Tehran retaliated against the US-Israeli strikes by threatening to attack vessels that try to use it.
Shipments have largely been at a standstill since the conflict started on 28 February, though some countries like India and Malaysia have negotiated safe passage for their vessels.
The disruption has led to energy prices surging around the world.
The US-Iran talks were watched closely for signs that disruptions to oil shipments through the Strait of Hormuz would ease soon, said economist Chua Yeow Hwee from Singapore’s Nanyang Technological University.
“Oil prices are likely to remain elevated because expectations now depend on whether the blockade is fully implemented, whether shipping disruptions spread, and whether diplomacy resumes,” he said.
Major stock indexes in Asia slipped on Monday, with the Nikkei 225 in Japan 0.7% lower and South Korea’s Kospi down by 1%.
Countries in Asia have been hit especially hard by the fallout of the Iran war as they are heavily reliant on oil from the Middle East.
US stock futures also pointed to a lower open for Wall Street shares.
Stock futures are an agreement between investors to buy or sell an asset at a certain time in the future at a set price and can indicate the direction of a market.
Energy prices and financial markets around the world have seen big swings in recent weeks as investors react to developments in the conflict.
Brent crude slid to about $90 a barrel on 8 April after the US and Iran agreed a conditional two-week ceasefire that included the reopening of the Strait of Hormuz.
Prices have been volatile since then as doubts grew over whether the ceasefire would last and as Israeli strikes on Lebanon continued.
The cost of oil has now “rewound” to levels seen before the ceasefire announcement and is expected to rise further in the coming days if the conflict escalates, analyst Saul Kavonic from financial services firm MST Marquee told the BBC.
“The truth is, oil prices are not as high as they normally would be” given the scale of disruption to supplies because traders still hope shipments will resume soon, Kavonic said.
“But if that doesn’t happen, oil prices will head higher,” he added.
Trump said in a Truth Social post on Sunday that the US will start “BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz”.
US Central Command (Centcom) later said the blockade of traffic entering and exiting Iranian ports will begin at 10:00 ET (14:00 GMT) on Monday.
It will be enforced “impartially against vessels of all nations entering or departing Iranian ports and coastal areas,” Centcom said in a post on social media.
Centcom also said it “will not impede” ships in the Strait of Hormuz heading “to and from non-Iranian ports”.
Iranian parliamentary speaker Mohammad Bagher Ghalibaf, who led negotiations for Tehran in Pakistan, says the country “will not submit to any threat, in a statement carried by local media.
Iran’s Islamic Revolutionary Guard Corps (IRGC) Naval Forces said that any military vessels that approach the strait will be considered to be violating the ceasefire between Washington and Tehran and “dealt with severely”.
