Oil prices climbed back above $100 a barrel on Sunday after President Donald Trump said the United States would block “any and all ships attempting to enter or leave the Strait of Hormuz,” threatening to further disrupt oil flows.
Brent crude, the international benchmark, rose 8% to about $102. US crude oil rose 8% to $104.
Dow futures sank 1.04%, or 502 points. S&P 500 futures fell 1% and Nasdaq futures fell 1.15%.
“We’re not going to let Iran make money by selling oil to people they like and not people they don’t like, or whatever. It’s going to be all or nothing,” Trump said on Fox News’ “Sunday Morning Futures.”
Oil prices remain below recent highs reached last week before President Donald Trump called off his threat of mass devastation in Iran and agreed to ceasefire talks.
But with a lasting ceasefire deal unable to be reached and the clock ticking toward another deadline, oil prices are now trading above where they settled on April 1, another key date. That was just before Trump’s disastrous prime-time speech in which he failed to detail an exit strategy from the war.
Iran has benefited financially from the war, charging up to $2 million per ship in tolls to pass through the crucial strait. Similarly, Trump floated the idea of tolls last week as a “joint venture” with Iran.
The country also managed to export an average of 1.85 million barrels of crude oil per day through March, about 100,000 barrels per day more than in the previous three months, according to data and analysis firm Kpler.
The Islamic Revolutionary Guard Corps warned Sunday that any military vessel approaching the strait “will be dealt with harshly and decisively,” according to Iran’s semi-official Fars News.
The lockdown is expected to go into effect at 10 a.m. ET on Monday, according to US Central Command.
Trump’s plan risks costing Americans more: If oil prices rise, gas prices will remain high. A gallon of gasoline in the United States cost an average of $4.12 on Sunday, 38% more than at the beginning of the war, despite having dropped slightly over the weekend.
“It could be a long time from now” before the war ends and oil prices fall, Karen Young, a senior fellow at the Middle East Institute, told CNN on Sunday.
High oil costs will also affect food prices, Young said, as materials used for fertilizers and creating food packaging are affected by supply chain disruptions.
“We’re going to start to see that inflationary pressure… think about everything you buy at a big box retailer,” he said.
