LONDON: Global oil prices surged on Wednesday after reports that the United States is preparing to extend its blockade of Iranian ports, raising concerns over prolonged disruption to global energy supplies.
Brent crude climbed to around $115 a barrel, up from just over $110 at Tuesday’s close, before easing slightly to $114.37 by midday in London trading.
The gains followed a report by The Wall Street Journal that US President Donald Trump had instructed aides to prepare for an extended blockade of Iranian ports to intensify economic pressure on Tehran.
According to the report, Trump opted to continue squeezing Iran’s oil exports rather than pursue riskier options such as resuming bombing or disengaging from the conflict.
Strait of Hormuz disruption
The move comes amid heightened tensions around the Strait of Hormuz, a critical waterway that typically carries about one-fifth of the world’s oil and liquefied natural gas supplies.
Iran has restricted shipping through the strait, which has been effectively disrupted for weeks since the conflict began on February 28 following US and Israeli strikes.
Tehran has warned that vessels approaching the strait could be targeted, while Washington has said its forces would intercept or turn back ships travelling to or from Iranian ports.
Oil markets have experienced sharp swings since the onset of the conflict.
Prices fell to around $90 per barrel on April 17 following a ceasefire between Israel and Lebanon and a Pakistan-brokered US-Iran ceasefire on April 8.
However, Brent has risen steadily over the past 12 days as the blockade continued and prospects for a quick resolution dimmed.
“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,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management.
US and Iran trade warnings
In a post on Truth Social, Trump urged Iran to “get smart soon” and agree to a deal, saying the country “couldn’t get its act together”.
He also claimed Tehran had asked Washington to lift the blockade, describing Iran as being in a “state of collapse”.
US Treasury Secretary Scott Bessent said in posts on X that the blockade was beginning to impact Iran’s oil sector.
“Iran’s creaking oil industry is starting to shut in production thanks to the US blockade,” he wrote, adding that gasoline shortages could follow.
Bessent also said Iran’s main export terminal at Kharg Island was nearing storage capacity, which could force production cuts and result in daily revenue losses of around $170 million.
He warned that the Treasury would continue to apply “maximum pressure”, adding that any entity facilitating Iranian oil flows risked US sanctions.
Iranian officials, however, said on Tuesday that the country could withstand the blockade by using alternative trade routes.
Global economic ripple effects
The World Bank said on Tuesday that energy prices could rise by 24% in 2026, potentially reaching their highest levels since the Russia-Ukraine conflict in 2022, even if the most severe disruptions from the Iran conflict ease by May.
Equity markets showed mixed reactions. European stocks fell on Wednesday as investors assessed corporate earnings and awaited the US Federal Reserve’s latest interest rate decision.
London’s FTSE 100 dropped 0.76%, while the pan-European Stoxx index was down 0.4% at midday. France’s CAC 40 fell 0.54% and Germany’s DAX edged lower.
In contrast, most Asian markets posted gains, extending a recovery after initial losses triggered by the conflict.
