Brent crude prices jumped nearly 8% on Monday. Prices surpassed $102 a barrel as the U.S. Navy prepares a blockade of the Strait of Hormuz. The military action follows the collapse of peace negotiations in Pakistan. U.S. and Iranian officials failed to reach a deal over the weekend to end the ongoing conflict.
President Donald Trump announced the blockade will begin on April 13. The operation targets any vessel paying a crossing fee to Iran. This response follows Iran’s effective closure of the shipping lane and subsequent global supply disruptions.
Iran’s Revolutionary Guards threatened to respond decisively to any approaching military vessels. The conflict threatens approximately 2 million barrels of Iranian-linked oil flows per day. Analysts expect extreme market volatility due to the increased supply risk for the global energy market.