Energy markets are once again on edge given the threat issued by President Trump regarding a blockade of the Strait of Hormuz and other Iranian ports.
The announcement came after the US and Iran failed to reach an agreement in diplomatic talks held in Islamabad from Saturday to Sunday morning.
Trump said in a Truth Social post on Sunday that the US would begin “intercepting any and all vessels attempting to enter or leave the Strait of Hormuz.”
US Central Command later said that the blockade of traffic entering and exiting Iranian ports would begin at 10:00 a.m. ET (14:00 GMT) on Monday.
As a result of the gloomy geopolitical scenario, oil prices rose above $100 a barrel as energy markets reopened in Asia on Monday.
Global benchmark Brent crude rose 7.3 percent to $102.30 and West Texas Intermediate gained 8.7 percent to $104.94.
Last Wednesday, a wave of relief was seen in energy markets as oil fell below $100 after the US and Iran agreed to a conditional ceasefire deal under a two-week framework to reopen the Strait of Hormuz.
However, the failure of recent talks has not only increased the stakes in this geopolitical conflict but also put the energy market on edge, worrying about an impending energy crisis.
Since February, the Strait of Hormuz has emerged as a flashpoint in the US-Iran conflict, known for shipping 20 percent of the world’s oil. Many shipments carrying oil have been halted following the continued closure of the strait announced by Iran.
According to Chua Yew Hwee, an economist at Singapore’s Nanyang Technological University, “Oil prices are likely to remain high as expectations now hinge on whether the blockade is fully enforced, whether shipping disruptions spread, and whether diplomacy resumes.”
stock markets fell
Asia’s major stock indexes fell on Monday. For example, the Nikkei 225 in Japan fell 0.7 percent and the Kospi in South Korea dropped 1 percent.
US stock futures also signal the beginning of a bearish trend for Wall Street stocks. India’s Nifty 50 was the worst performing major Asian index, falling nearly 2 per cent.
The monthly US gas contract rose 9% to $119.50 a therm, its highest level since last Tuesday.
Stocks in Australia were 0.53 percent lower and China’s CSI300 index dropped 0.2 percent. Hong Kong’s Hang Seng index was in early decline and was 1.22 percent lower.
Asian markets are bearing the brunt of the growing conflict due to their heavy dependence on oil coming from the Middle East.
