Oil prices rose 5% on Monday as Donald Trump reinstated the US blockade of Iranian shipping in the Gulf and will charge other countries to pass through the strait of Hormuz.
As the US and Iran exchanged strikes amid an escalating standoff over the vital trade route, the price of Brent crude climbed to $79.37 a barrel.
The international crude benchmark began rising after a weekend of escalating tensions in the Middle East, and climbed higher as the US president said Iranian ships would no longer be able to travel through the strait of Hormuz.
Trump added that the US would charge a 20% toll on other countries’ eligible cargo to cover the cost of “providing safety and security to this very volatile section of the world”.
In a social media post, Trump said: “The USA will be, from this point forward, known as ‘THE GUARDIAN OF THE HORMUZ STRAIT’,” adding that the arrangement would “begin immediately”.
The US move to assume control of the strait has cast fresh doubt over hopes that normal flows of Gulf oil and gas into the global market will resume after months of disruption because of the war. Oil was trading at $72.48 a barrel before the US-Israeli strikes on Tehran in late February and reached highs of $120 in April.
The latest developments hit airline shares on both sides of the Atlantic.
In the US, tech stocks were down in early afternoon trading on Wall Street, after the escalation of hostilities. The tech-heavy Nasdaq was down 1% and the S&P 500 fell 0.4%.
Asian stock markets had earlier fallen sharply, with South Korea’s Kospi down 8% and Japan’s Nikkei 225 and China’s Shanghai Composite 2% lower.
Chip companies were also hit, with shares in South Korea’s SK Hynix slumping by 15%. Its rival Samsung Electronics sank 10%.
The market swings came after the US launched more strikes against Iran on Sunday evening, prompting retaliation from Tehran.
US Central Command said on X that the strikes were “to continue degrading their ability to attack civilian mariners and commercial ships freely transiting the strait of Hormuz”. It added that Trump “has directed the strikes to hold Iranian forces accountable”.
It marked the latest cycle of attacks in the Middle East as Iran seeks to assert control over the strait of Hormuz, a vital shipping channel through which a fifth of the world’s oil supply normally passes.
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The escalations have cast further doubt on the fragile interim US-Iranian truce signed last month. Analysts at the bank Goldman Sachs wrote in a note: “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.”
The number of vessels passing through the strait is already falling, according to the data analyst Kpler. It found that only six vessels crossed the strait on Sunday, the fewest in five weeks.
Tankers that exited the strait included the very large crude carrier Humanity, which carried 2m barrels of Iranian oil, and another tanker, Capetan Andreas, carrying about 500,000 barrels of Kuwaiti oil products, Kpler found. Three empty tankers entered the Gulf to load oil, it said. Most tankers switch off their transponders when crossing the strait.
Trump said on Sunday that the shipping route was open to commercial traffic, although Iran said earlier that it had closed the strait after a vessel travelled on an unapproved route.
Iran’s Islamic Revolutionary Guard Corps said on Monday that its navy stopped two ships in the strait on Sunday by shutting down their systems, although it did not name the vessels involved.
Gold fell on Monday by 1.4% to $4,083 an ounce, as higher oil prices stoked fears that central banks may have to increase interest rates to combat inflation. Gold becomes relatively less attractive when interest rates are higher as the metal does not pay a yield.
Oil prices pared back some gains on Monday after the Opec cartel of oil-producing nations lowered its forecast for global demand growth in 2026 to 780,000 barrels a day, compared with its previous estimate of 970,000. It marks the third consecutive downward revision by the producer group.
However, Opec has continued to estimate a smaller impact on global energy demand compared with other forecasters. The Paris-based International Energy Agency has said it expects demand to decline in 2026 by 1m barrels a day.
