Key facts
- Oil prices surged as President Donald Trump ordered a 20% levy on cargo through the Strait of Hormuz and reinstated a blockade of Iranian ports.
- Brent crude rose 4.3% to $86.91 a barrel, and West Texas Intermediate futures were up 3.3% at $80.70.
- The escalation follows Iran's Revolutionary Guard claiming the Strait of Hormuz was closed to traffic.
- The Strait of Hormuz is a critical chokepoint for global oil supply, with about a fifth of the world's oil passing through it.
- US Central Command stated the waterway remained open to lawful transit, disputing Iran's claim.
Oil prices climbed on Tuesday following President Donald Trump's announcement of a 20% levy on all cargo shipped through the Strait of Hormuz and the reinstatement of a blockade on Iranian ports. These actions have heightened concerns about potential disruptions to global oil supplies.
West Texas Intermediate futures rose approximately 3.3% to $80.70 a barrel, while the international benchmark, Brent crude, gained 4.3% to trade at $86.91. This follows a significant surge in the previous session.
Trump stated on Truth Social that the U.S. would impose the levy, declaring America the "GUARDIAN OF THE HORMUZ STRAIT." The blockade of Iranian ports near the chokepoint is set to take effect Tuesday afternoon ET, according to U.S. Central Command.
The escalation marks a significant increase in tensions with Tehran. The Strait of Hormuz is a crucial waterway, with approximately one-fifth of the world's oil supply transiting through it. Traffic had previously collapsed after Iran began attacking vessels in March, only beginning to recover after an interim agreement between Washington and Tehran.
On Saturday, Iran's Revolutionary Guard claimed the strait was closed to all traffic, a statement disputed by the U.S. Central Command, which asserted on Sunday that the waterway remained open for lawful transit.
Despite the recent price increases, oil remains below its earlier wartime highs. Brent crude had peaked at $126 a barrel on April 30, but has since declined as global supply has recovered. The International Energy Agency reported a jump in output by 4.1 million barrels a day in June, though it still remained below prewar levels.