Oil prices surged and global stock markets tumbled on Monday after peace talks between the United States and Iran collapsed, with US President Donald Trump announcing plans to blockade the strategic Strait of Hormuz.
The weekend negotiations in Islamabad ended without agreement, with US Vice President JD Vance accusing Iran of refusing to abandon its nuclear programme. Tehran, in turn, blamed “maximalism, shifting goalposts, and blockade” from Washington. The breakdown dashed hopes for a ceasefire in the six-week conflict that has already driven up crude prices and fuelled inflation fears worldwide.
Both main oil benchmarks jumped around eight per cent, with West Texas Intermediate topping $100 a barrel. Asian equities fell sharply, with Tokyo’s Nikkei down 1.0 per cent, Hong Kong’s Hang Seng down 1.0 per cent, and Seoul’s Kospi also lower. Other regional markets, including Shanghai, Sydney, Singapore, Taipei, and Jakarta, also posted losses.
In a Truth Social post, Trump said the US Navy would “begin the process of BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz,” while clarifying the action would apply only to vessels travelling to or from Iranian ports. He warned that any Iranian attack on US forces or civilian shipping would be met with overwhelming force.
The US military said it would implement the blockade of all Iranian Gulf ports on Monday at 1400 GMT, effectively seizing control of maritime traffic. Iran’s Revolutionary Guards warned that its forces had full control over the strait and threatened to trap any enemy in a “deadly vortex” if provoked. Iran’s navy chief dismissed Trump’s threat as “ridiculous and funny.”
Analysts warned that a US blockade would be seen not as a minor coercive measure but as a de facto resumption of hostilities. Market observers noted that lingering mistrust between the long-time adversaries leaves them far from common ground, while investors also remain watchful for any signs of progress in the Israel-Hezbollah conflict.
The renewed tensions in the Middle East have heightened inflation concerns and pushed gold prices lower amid expectations that central banks will keep interest rates elevated. US consumer prices rose 3.3 per cent in March, the highest since May last year, underscoring the economic impact of the conflict.
As crude prices climb and global markets remain volatile, the focus now turns to whether further diplomatic efforts can prevent a wider regional crisis.
