Oil rises back above $100 and stocks slump as Trump threatens to blockade the Strait of Hormuz

Peace negotiations between the U.S. and Iran broke down over the weekend, sending oil prices back above $100 a barrel on Monday as the U.S. Navy moved to blockade Iranian ports.

By Monday morning, oil benchmarks were sharply higher, with WTI for May delivery gaining close to 8% to hover around $104 a barrel and June-delivery Brent adding more than 7% to reach roughly $102.50 a barrel.

In a Sunday announcement, CENTCOM outlined the terms of the action: starting at 10 a.m. ET Monday, the military would halt all maritime traffic moving in or out of Iranian ports, though ships bound for or departing from non-Iranian destinations would be allowed to pass freely. "The blockade will be enforced impartially against vessels of all nations entering or departing Iranian ports and coastal areas, including all Iranian ports on the Arabian Gulf and Gulf of Oman," CENTCOM said in a statement.

Sunday's announcements came after weekend negotiations in Pakistan ended without a deal. Trump took to social media to declare the blockade and separately directed the Navy to hunt down and stop any vessel in international waters that had paid Iran for passage through the strait. The Wall Street Journal reported, citing officials and others briefed on the matter, that limited military strikes against Iran are also among the options the president is weighing.

Vice President JD Vance, who headed the American negotiating team, told reporters in Islamabad on Sunday that Tehran's refusal to make an "affirmative commitment" to forgo nuclear weapons development had doomed the talks. "We have not seen that yet; we hope that we will," he said. On the Iranian side, parliamentary speaker Mohammad-Bagher Ghalibaf offered his own assessment, saying the U.S. "failed to gain the trust of the Iranian delegation in this round of negotiations."

The collapse of the talks puts the ceasefire Trump announced the previous Tuesday in jeopardy. It is unclear whether the U.S. will resume airstrikes on Iran, according to CNBC. Iran had attached conditions to its willingness to allow ships through the strait during the ceasefire. Ali Akbar Velayati, a Khamenei adviser, underscored that posture Sunday, telling state media that control over access to the waterway rests with Tehran.

Before the U.S. and Israel launched attacks on Iran on Feb. 28, the Strait of Hormuz served as a conduit for roughly one-fifth of the world's oil supply. Shipping through the route has collapsed since then — just three supertankers completed the passage on Saturday, a stark contrast to the more than 100 vessels that made the trip on a typical day before hostilities began.

The disruption to energy supplies has reverberated through the U.S. economy. Gas prices at the pump rose to a national average of $4.15 a gallon following the outbreak of the conflict, a level not seen since August 2022. The energy index surged 10.9% in March, its largest monthly gain since September 2005, pushing the annual inflation rate to 3.3%. The gasoline index alone climbed 21.2% for the month, the steepest rise since the series began in 1967. Consumer sentiment fell to a record low of 47.6 in April, with one-year inflation expectations rising to 4.8%, as Americans cited the Iran conflict as a primary driver of their economic anxiety.