Oil prices experienced a significant jump on Monday, with U.S. crude oil closing up 9.4% at $78.14 per barrel and international Brent crude oil rising 9.6% to $83.30 per barrel. This surge, the largest single-day increase for Brent since May 2020, followed President Donald Trump's declaration on social media that the U.S. would reinstate its blockade on Iran, specifically targeting vessels transiting to or from Iranian ports and coastal areas in the Strait of Hormuz. These price points are the highest since June 15.

Adding to the market's volatility, Trump also stated the U.S. would seek a 20% "reimbursement" on all cargo shipped through the Strait of Hormuz for providing safety and security, though the mechanism for this charge was unclear. This proposal was immediately met with rejection from the International Maritime Organization (IMO), which stated there was no legal basis for mandatory tolls in international navigation straits. Energy companies, like Chevron, have also previously opposed similar toll ideas presented by Iran, emphasizing freedom of navigation.

The reintroduction of the blockade and the proposed transit fees come amidst renewed U.S.-Iran tensions and recent attacks on commercial vessels, including Sunday night's incidents involving projectiles and drones. Even before Trump's announcement, traffic in the Strait of Hormuz, a critical waterway for 20% of the world's energy supplies, had already plunged 52% week over week. Analysts, such as Patrick De Haan from GasBuddy, anticipate that the national average price of gasoline will reach $4 per gallon soon, with increases being passed on to consumers within 24-48 hours. The stock market also reacted negatively, with the S&P 500 down 0.8% and the Nasdaq falling 1.6%.

Despite Trump's claim that the strait would remain open for all other countries, maritime tracking services like MarineTraffic by Kpler indicated a steep decline in vessel transits. The U.S. Central Command confirmed the blockade would commence on Tuesday at 4 p.m. ET, stating the U.S. military would continue to support traffic flow for vessels not violating the blockade. The market's caution, despite a prior U.S.-Iran memorandum of understanding, was reinforced by these developments, leading marine hull insurance head Ben Stone of Aon to highlight the critical question of sustained safe commercial traffic through the strait.