Oil prices spiked on Monday after the United States confirmed it had seized an Iranian cargo vessel and Iran responded by closing the Strait of Hormuz less than a day after briefly reopening it.
Prices surge on renewed supply shock
Brent crude futures rose as much as 7% to $97.50 a barrel before easing to $95.71 by 18:56 ET. U.S. crude benchmarks also climbed in early Asian trading as markets reacted to the prospect of fresh disruptions to Middle East supply routes.
The Strait of Hormuz handles about one-fifth of global crude shipments and is considered one of the world’s most critical energy chokepoints. The renewed closure has revived fears of a prolonged supply shock and higher prices in the months ahead.
US confirms seizure of Iranian vessel
President Donald Trump said American forces fired on and then seized an Iranian-flagged cargo ship, identified as the TOUSKA, after it allegedly attempted to breach a U.S. naval blockade in the Gulf of Oman.
In a social media post, Trump said the ship had been disabled when it tried to run the blockade imposed on April 13, which targets vessels entering or leaving Iranian ports. U.S. officials have said ships merely transiting the region to non-Iranian destinations are still allowed to pass.
Iranian state media condemned the seizure and vowed retaliation, framing the action as a violation of its sovereignty and regional rights.
Tehran closes strait again, threat level raised
Shortly after the ship’s seizure was confirmed, Tehran moved to close the Strait of Hormuz again, reversing a short-lived reopening over the weekend that had briefly calmed markets and triggered a 9% fall in oil prices on Friday.
The United Kingdom Maritime Trade Operations (UKMTO) raised its threat assessment for the waterway to “critical,” citing the risk of attacks, blockades and further interruptions to shipping.
Iranian outlets reported that several civilian vessels attempting to transit the strait under the renewed restrictions came under fire, further escalating tensions and raising concerns over the safety of commercial shipping.
Diplomatic prospects dim before ceasefire deadline
The latest escalation comes as the conflict between the U.S. and Iran enters its eighth week, with a ceasefire deadline looming on April 21.
Trump said U.S. envoys were due in Islamabad for additional talks aimed at easing tensions, but Iran publicly rejected further dialogue. The breakdown in diplomacy has cast doubt on any near-term resolution and underscored the risk of miscalculation in a congested maritime theater.
The conflict has already disrupted key oil transit routes and kept pressure elevated across global energy markets.
From $120 highs to renewed volatility
At the outset of the war, crude prices briefly approached $120 per barrel, before retreating as signs of possible peace efforts emerged. Those expectations have now faded amid stalled talks and worsening security conditions at sea.
With transit through the Strait of Hormuz repeatedly interrupted, market analysts expect continued price swings as traders weigh the possibility of deeper supply losses against the capacity of other producers and strategic reserves to fill the gap.
IEA and EIA warn of historic disruption
The International Energy Agency (IEA) has described the situation as potentially the “largest supply disruption in the history of the global oil market.” Roughly one-fifth of the world’s petroleum supply normally passes through the strait, magnifying the impact of any long-lasting closure.
In response, the U.S. Energy Information Administration sharply raised its forecast for the average Brent spot price to $114.60 per barrel for the second quarter of 2026, reflecting expectations of sustained tightness in physical supply and heightened geopolitical risk premia.
Broader market impact and risk sentiment
Periods of intense geopolitical conflict tend to alter behavior across high-volatility markets. When perceived global risk rises, participants often pull back from assets that rely heavily on speculative flows and are sensitive to swings in confidence.
Surging energy costs commonly feed directly into higher inflation, which can push central banks toward tighter monetary policy. Higher interest rates and reduced liquidity typically make it harder for assets without consistent cash flows to attract new capital, as borrowing becomes more expensive and capital allocation more selective.
Shift toward perceived safe havens
During episodes of severe uncertainty and physical supply-chain disruption, capital often rotates toward assets seen as safer stores of value. Market participants frequently increase exposure to tangible commodities or established government bonds, while trimming positions in newer or more fragile segments of the financial system.
Monitoring signals beyond standard financial data has become increasingly important. Trends in shipping insurance premiums, changes in maritime threat levels and official diplomatic statements now offer critical clues about the direction of risk and the durability of current price trends.
With the failure of peace efforts ahead of the April 21 deadline and no clear de-escalation path in sight, traders are preparing for a period of prolonged instability in both energy markets and broader risk assets.
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