WASHINGTON/DUBAI – The U.S. military said it will begin a blockade of ships leaving Iran’s ports on Monday, and Tehran threatened to retaliate against ports of its Gulf neighbours after weekend talks on ending the war broke down, putting a ceasefire at risk.
Oil prices surged when trade reopened on Monday, with no sign of a swift reopening of the Strait of Hormuz to ease the biggest ever disruption in supplies.
Since the war started on Feb. 28, Iran has .effectively shut the strait to all vessels except its own, saying passage would be permitted only under Iranian control and subject to a fee. U.S. President Donald Trump said Washington would now block Iranian vessels and any ships that paid such tolls.
NATO allies including Britain and France said they would not be drawn into the conflict by taking part in the blockade, stressing instead the need to reopen the waterway, through which about one-fifth of the world’s oil normally passes.
The ceasefire, which halted six weeks of U.S. and Israeli airstrikes, is under threat, with only a week left to run. Washington said Tehran rejected its demands at weekend talks in Islamabad, the highest-level discussions since Iran’s 1979 Islamic Revolution.
The U.S. military’s regional Central Command said the blockade would start at 10 a.m. ET on Monday, to be “enforced impartially against vessels of all nations” entering or leaving Iranian ports in the Gulf and the Gulf of Oman.
Two Iranian-linked tankers, the Aurora and New Future, laden with oil products, left the strait on Monday before the U.S. blockade was due to take effect, according to LSEG data.
An Iranian military spokesperson called any U.S. restrictions on international shipping “piracy,” warning that if Iranian ports were threatened, no port in the Gulf or Gulf of Oman would be secure. Any military vessels approaching the strait would violate the ceasefire, Iran’s Revolutionary Guards said.
On Sunday, Trump had posted on social media that ships paying Iran an “illegal toll” would not be granted safe passage, adding, “Any Iranian who fires at us, or at peaceful vessels, will be BLOWN TO HELL!”
‘ZERO LESSONS LEARNED’ SAYS TEHRAN
With the war unpopular at home and rising energy prices causing political blowback, Trump paused the U.S.-Israeli bombing campaign last week after threatening to destroy Iran’s “whole civilisation” unless it reopened the strait.
Israel has continued to bombard Iran-backed Hezbollah in Lebanon and on Monday Israeli troops launched an attack to seize a key south Lebanon town from the group. Israel and the U.S. have said the campaign against Hezbollah was not part of the ceasefire, while Iran has insisted it is.
Iran has ignored the demand to open the strait, while bringing new demands to the talks, including recognition of its control of the waterway, lifting of sanctions and the withdrawal of forces from U.S. military bases across the Middle East.
Trump has declared victory, despite failing to achieve the objectives he set out at the start of the war: to eliminate Iran’s ability to strike its neighbours, end its nuclear programme and make it easier for Iranians to topple their government.
Iran retains missiles and drones that can hit Gulf neighbours, and a stockpile of uranium enriched to near bomb-making levels. Tehran’s leadership, which faced a popular uprising at the start of the year, has withstood the U.S. onslaught with no sign of organised opposition.
U.S. officials said Iran had rejected demands at the talks to give up the uranium stockpile, end future enrichment and halt funding for its regional allies – positions carried over from negotiations Trump abandoned two days before the war.
Washington still hopes that Iran will seek peace and a chance to begin rebuilding from damage that has deepened an economic crisis that provoked pre-war domestic unrest.
But emboldened Iranian officials say they are in a stronger position than before, and will make a deal only if the U.S. makes further concessions. Iran had “encountered maximalism, shifting goalposts, and blockade” from the United States at the talks, said Foreign Minister Abbas Araqchi.
“Zero lessons learned,” he added. “Good will begets good will. Enmity begets enmity.”
OIL BENCHMARKS UNDERSTATE DISRUPTION
Benchmark oil prices, which had eased last week after the ceasefire was announced, surged by around 7% on Monday, back above $100 a barrel.
Traders say the main benchmarks – used to set prices for trillions of dollars’ worth of commodities worldwide – actually understate the severity of a disruption with no precedent in modern times.
The benchmarks are based on contracts to deliver oil one to two months ahead. Physical supplies, however, are already tight, with some refineries paying record premiums of up to $50 above the benchmarks to get their hands on oil now.
If the benchmarks catch up to physical prices, industries would face massive cost rises. A reckoning could be approaching as the last Gulf oil shipped before the war runs out.
“Reopening the Strait has become the market’s most time-sensitive priority,” JP Morgan analysts said in a note. “The last tanker to clear Hormuz on Feb. 28 is expected to reach its destination around April 20, marking the point at which pre-closure barrels are fully exhausted from the global supply chain.”
Trump has long said a bump in U.S. gasoline prices would be short-lived. But he told Fox News’ “Sunday Briefing” that they could stay high through November’s midterm elections.
Iran’s chief negotiator, Mohammad Baqer Qalibaf, posted a map of Washington-area gasoline prices on social media with the comment: “Enjoy the current pump figures. With the so-called ‘blockade’. Soon you’ll be nostalgic for $4–$5 gas.”
Reporting by Reuters bureaus; Writing by Peter Graff; Editing by Ros Russell and Hugh Lawson, Reuters
