The United States and Iran failed to reach an agreement in the peace talks held in Pakistan, as reported by the Central Command (CENTCOM) on Sunday (April 12th), the U.S. military will officially impose a naval blockade on Iranian ports starting at 10 a.m. Eastern Time on Monday. This announcement has sent shockwaves through the global energy market, with international oil prices surging by about 8% on Sunday, once again surpassing the $100 per barrel mark.
CENTCOM stated that this blockade will target all maritime traffic entering and exiting Iranian ports.
“The blockade will impartially target all vessels entering or leaving Iranian ports and coastal areas, including all Iranian ports in the Persian Gulf and the Gulf of Oman,” CENTCOM said in a statement.
However, the U.S. emphasized that it will not interfere with the freedom of navigation for ships heading to “non-Iranian ports.”
Previously, President Trump announced through the social media platform Truth Social that the U.S. Navy would intercept any ships paying transit fees to Iran in international waters to pass through the Strait of Hormuz.
He emphasized, “Under no circumstances will anyone making illegal payments for passage be allowed safe passage on the high seas.”
Before the talks collapsed, Vice President Vance, leading the U.S. delegation, stated in Islamabad to reporters that the key to the breakdown in negotiations was Iran’s unwillingness to commit to abandon the development of nuclear weapons.
“The issue is simple, whether we see a fundamental determination from the Iranian side not to develop nuclear weapons,” Vance said. “We have not seen that yet, but we remain hopeful.”
In response to the U.S. blockade, the Iranian Revolutionary Guard claimed on Sunday that the Strait of Hormuz remains under Iran’s “complete control.” Iran warned that any warship attempting to approach the strait would be considered a violation of the ceasefire agreement and face fierce retaliation.
Affected by the blockade news, international benchmark Brent crude oil futures prices surged to $102.80 per barrel, an increase of 7.98%; U.S. West Texas Intermediate (WTI) crude also rose sharply to $104.88 per barrel, an increase of 8.61%.
Analysts Brian Martin and Daniel Hynes from ANZ Bank stated in their report, “This move will not only curb oil exports of the Persian Gulf producing countries but also limit Iran’s ability to export oil, exacerbating the supply disruptions the market is currently experiencing.”
IG market analyst Tony Sycamore expressed that this action will effectively cut off the flow of Iranian oil, compelling allies and customers of Tehran to exert pressure and reopen the waterway.
As tensions escalate, countries are beginning to take contingency measures. For example, Hungary has announced fuel price caps and plans to utilize strategic reserves to address potential energy shortages.
Amid the conflict, Saudi Arabia announced on Sunday that it has restored the transportation capacity of its “East-West oil pipeline” to 7 million barrels per day, attempting to provide an alternative export route in case of blocked straits.
Despite the looming blockade, three fully-loaded oil tankers passed through the strait on Saturday, indicating sporadic shipping activities in the market before the full blockade comes into effect.