Oil prices breach $100 as Trump vows to blockade Strait of Hormuz

(Sharecast News) - Oil prices surged on Monday, after peace talks between the US and Iran collapsed over the weekend, prompting the White House to threaten to blockade the Strait of Hormuz. Both benchmark Brent crude and West Texas Intermediate once again climbed above $100 a barrel in morning trading. By noon BST, Brent was up 8% at $102.55 while WTI was 8% higher at $104.56.

Global energy prices have soared since the US first attacked Iran at the start of March. As the conflict spread, refineries were either damaged or shuttered, while the vital Strait of Hormuz - through which around 20% of the world's oil is transported - was deemed too dangerous to pass, with Tehran vowing to attack any ship belonging to the US, Israel or their allies.

A tentative ceasefire was signed last week, helping calm prices moderately, but talks in Pakistan over the weekend failed to secure a lasting peace deal. In response, Donald Trump has threatened a US naval blockade of the Strait of Hormuz, restricting Iran's ability to export and sell oil. It is due to start on Monday at 1000 Eastern time.

Tehran has threatened to retaliate by targeting Gulf ports.

Russ Mould, investment director at AJ Bell, said: "Against this backdrop, oil above $100 a barrel is not a surprise, and the longer it persists at this level, the greater the scars for the global economy. The stagflation word is being widely aired once again as geopolitical turmoil threatens to stymie international growth and stoke inflationary pressures."

Susannah Streeter, Wealth Club chief investment strategist, said: "By blockading the Strait of Hormuz, Trump [will turn] Iran's chokepoint into a US stranglehold. The prospect of all tankers ceasing transit through this key waterway is making the energy crisis even more acute.

"Trump has a record of pulling back from the brink, especially when markets react negatively, and so there will be hopes he'll remain true to form and an agreement can be salvaged. But investors should be prepared for more turbulence."