A ship waits to pass through the Strait of Hormuz following a two-week temporary ceasefire between the US and Iran in Oman on April 8, 2026, which is conditional on the opening of the strait.
Wedding JH Alasar | Anadolu | getty images
Fifty days after the US-Israel war with Iran, tensions rose again after clashes in the Gulf caused a prolonged disruption to shipping and cast doubt on the fragile ceasefire that was set to expire this week.
On Friday, Iran declared the Strait of Hormuz fully open to commercial traffic, causing crude oil prices to fall more than 10%. By Saturday, hopes of the artery fully opening were quickly dashed as Tehran reopened the chokepoint after President Donald Trump refused to end the US naval blockade of Iranian ports.
After a slight uptick in transit efforts on Saturday, shipping traffic once again came to a halt with ships in the gulf catch fire Midway and being forced to retreat.
On Sunday, the US Navy opened fire and seized an Iranian container ship in the Gulf of Oman. Trump called Iran’s actions over the weekend a “complete violation” of the ceasefire and threatened to attack Iranian power plants and bridges if Tehran refused to compromise.
For markets, it was a reminder of the weakness of the two-week ceasefire, and an agreement that could have brought a permanent end to the war has still not been reached.
US stock futures fell while crude oil prices rose as the US and Iran edged closer to renewed conflict. West Texas Intermediate Futures It jumped more than 6% to $89 a barrel shortly after midnight Monday, while the international benchmark brent It rose 5.6% to $95.50 a barrel.
“On Saturday we had the most violent day in the strait since the beginning of this crisis, and things don’t look to be getting better,” said Rory Johnston, founder of Commodity Context.
“While we keep getting these selloffs and looking like we’re finally going to get it, football — Lucy pulls it off — and we’re back where we started,” Johnston told CNBC’s “Squawk Box Asia” on Monday.
Johnson, who is also a lecturer at the University of Toronto’s Munk School of Global Affairs and Public Policy, said, “The Strait is still not flowing, and 13 million barrels a day of production are shut in. We are losing it every day.”
best realistic results
Much will depend on whether the US and Iran meet for a second round of peace talks in Pakistan later this week as the ceasefire continues to hold. Due to expire on Tuesday.
Trump said American and Iranian negotiators would resume talks in Islamabad on Monday. However, Iran has denied that it will attend the meeting, citing Washington’s “excessive demands, unrealistic expectations, frequent changes in stance” and the ongoing blockade as a violation of the ceasefire.
The first round of talks on April 12 between Vice President J.D. Vance and Iranian Foreign Minister Abbas Araghchi failed to reach an agreement. Washington reportedly made a proposal 20 year pause on Iranian uranium Enrichment, a request rejected by Iranian leaders, requested 5 years.
Unless the US negotiating team gets rid of the misconception that military victory equates to strategic dominance, we will not be able to reach a solution.
alan eyre
Distinguished Diplomatic Fellow at the Middle East Institute
Alan Ayer, a distinguished diplomatic fellow at the Middle East Institute and former member of the US team that negotiated the 2015 Iran nuclear deal, said the underlying differences between Washington and Tehran go deeper than the current standoff.
“The American side is not really focused on negotiations. They are waiting for Iran to surrender,” Ayer said. “Until the US negotiating team gets rid of the misconception that military victory equates to strategic dominance, we will not be able to reach a solution.”
Eyre warned that the latest flashpoints risk escalating the conflict in the near term. “There is a tense trend here where both sides could escalate and go back to a shooting war, which no one wants.”
While the possibility of a productive round of talks in Islamabad remains, “unfortunately it is more likely to go the other way – a resumption of hostilities,” Ayer said.
high stakes gambling
The economic cost of the conflict is rising as the Strait of Hormuz – which normally carries about a fifth of global oil supplies – has been effectively closed for almost two months.
“This crisis is one of lost time and lost production,” Johnson said, estimating supply disruptions at about 13 million barrels of crude oil, condensate and natural gas liquids per day.
“The cumulative impact has already reached over half a billion barrels,” he said, warning that even an imminent deal announcement would not immediately mitigate the damage.
Even if a deal is reached, experts warn it could It took months to recover supplies lost due to the shutdown in recent weeks, keeping oil prices high for a longer period of time.
“If we really opened up, we would see an immediate $10 to $20 per barrel drop because of the speculative hot money. But at the end of the day, we would dump on the first day and then find ourselves further up — maybe into the $80s and $90s — to reflect the ongoing (oil) shortage.”
Crude oil prices have surged more than 30% since the war began, with Brent briefly hitting above $110 a barrel for the first time in nearly four years, before hopes of a breakthrough diminished, according to LSEG data.
According to Kpler data, more than 500 million barrels of crude oil and condensate have been taken out of the global market – the largest energy supply disruption in modern history.
Despite the severity of the energy disruption, US equity markets have remained largely resilient, as investors have viewed the conflict as a setback that will be resolved relatively quickly.
However, Vishnu Varathan, head of macro research at Mizuho Bank, cautioned that the optimism may be premature. “We cannot get prematurely excited about any signed agreement, because the long-term adverse effects mean we cannot get out of it quickly.”
International Monetary Fund gave this warning on Tuesday Global growth will inevitably suffer a setback Even if the ceasefire remains in place, citing uncertainty around the Strait of Hormuz as continuing to drag on, increasing energy costs and inflation.
“It’s clear we’re not going back to a Goldilocks scenario,” said Brian Arce, portfolio manager at Ford Asset Management, referring to a scenario of stable growth and low inflation. The longer the strait remains closed, the greater the threat to the global economy, he said, although the actual extent of the damage could change “on a daily and weekly basis.”
