Oil prices have climbed sharply following reports that the US is preparing for an ‘extended’ blockade of Iran. Brent crude rose to around $115 (£85) a barrel on Wednesday, having closed at just over $110 (£81) on Tuesday evening. The price had fallen slightly to $114.37 (£84.68) just before midday BST.
US Prepares for Extended Blockade
It follows reports from the Wall Street Journal that US President Donald Trump has instructed aides to prepare to extend the ongoing blockade of Iran’s ports, in an effort to squeeze the country’s economy. Iranian officials, however, stated on Tuesday that the country could withstand the blockade by utilizing alternative trade routes.
Iran has said it will continue to disrupt traffic traveling through the Strait of Hormuz in response to the US blockade. The price of oil has seen sharp swings since the start of the conflict, as the key Strait of Hormuz has been effectively closed for weeks.
Iran has severely restricted shipping through the strait — which usually carries about a fifth of the world’s supply of oil and liquid natural gas — in response to US and Israeli strikes that began on 28 February. Earlier this month, Tehran warned that any vessel approaching the strait would be targeted. The US then announced that its forces would intercept or turn back vessels traveling to or from Iran’s ports. Analysis by BBC Verify indicates that at least four vessels tracked from Iranian ports appear to have crossed the US blockade line.
Market Volatility and Trump’s Stance
Despite the fluctuations of recent weeks, the price of oil remains much higher than its pre-conflict level. The price of Brent crude dropped to $90 a barrel on 17 April, after a ceasefire between Israel and Lebanon was announced, and the US paused attacks on Iran on 8 April. However, the oil benchmark has been rising steadily over the last 12 days as the US continued its blockade.
On Wednesday, Trump urged Iran to ‘get smart soon’ and sign a deal, following days of deadlock in efforts to end the conflict. In a post on Truth Social, Trump commented that the country ‘couldn’t get its act together.’ US officials cited by the Wall Street Journal indicated that the president had instructed aides to prepare for an extended blockade of Iran’s ports to pressure Tehran. Officials reportedly said Trump opted to continue squeezing Iran’s economy and oil exports with the blockade, as other options like resuming bombing or withdrawing from the conflict carried more risk.
Global Economic Impact
The World Bank on Tuesday forecast energy prices would surge by 24% in 2026 to their highest level since Russia’s full-scale invasion of Ukraine four years ago, assuming the most acute disruptions caused by the Iran conflict end in May.
European stocks fell on Wednesday as investors digested corporate earnings and awaited the US Federal Reserve’s latest interest rate decision. The FTSE 100 fell 0.76%, while the pan-European Stoxx index was down 0.4% at midday. France’s Cac was down 0.54% and Germany’s Dax fell marginally. In contrast, Asian stock markets mostly rose Wednesday, continuing their recovery after being particularly hard hit by the initial shock from the conflict.
Arne Lohmann Rasmussen, chief analyst at Global Risk Management, commented, “The market is increasingly shifting towards a view that no longer expects a quick and lasting peace, nor an immediate reopening of the Strait of Hormuz.”
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