Oil prices surge past $103 a barrel after US announces blockade of Iran

Oil prices have risen sharply following US President Donald Trump’s announcement of a naval blockade of Iran.

Brent crude, the international benchmark, rose more than 8 percent on Sunday to top $103 a barrel.

It was the first time the benchmark rose above the psychologically important threshold of $100 since Tuesday, when prices surpassed $111 a barrel.

Trump announced on Sunday that the US Navy would block all ships from entering or exiting the Strait of Hormuz, following the collapse of ceasefire talks between US and Iranian officials over the weekend.

US Central Command said in a later statement that it would only block vessels travelling to and from Iran and that other traffic would not be impeded, in an apparent scaling back of Trump’s threat to impose a full blockade.

The command said the blockade would take effect on Monday at 10am Eastern Time (14:00 GMT).

Oil prices have been a rollercoaster since US-Israeli strikes on Iran prompted Tehran to impose a de facto blockade of the Strait of Hormuz, a conduit for about one-fifth of global oil and natural gas supplies.

After topping $119 last month, Brent fell below $92 a barrel last week after the US and Iran announced a two-week ceasefire following more than six weeks of war.

While Iran has allowed a limited number of ships to transit the waterway, subject to prior vetting and authorisation, traffic has been reduced to a trickle compared with peacetime levels.

Despite Washington and Tehran’s fragile truce officially remaining in place until April 22, only 17 vessels crossed the strait on Saturday, according to maritime intelligence firm Windward, down from roughly 130 daily transits before the war.

Major stock markets in Asia opened lower on Monday as Trump’s blockade threat stoked uncertainty on trading floors.

Japan’s benchmark Nikkei 225 fell 0.9 percent in morning trading, while South Korea’s KOSPI dropped more than 1 percent.

US stock futures, which are traded outside of regular market hours, also fell, with those tied to the benchmark S&P 500 down about 0.8 percent.