Oil prices saw a significant rally, with West Texas Intermediate futures jumping 9.4% to nearly $78 per barrel and Brent crude closing above $83 per barrel, marking their highest levels in almost a month. This surge was triggered by President Trump's announcement to reinstate a blockade on Iranian ships in the Strait of Hormuz and his proposal for a 20% fee on all other cargo transiting the strategic waterway. The move followed a weekend of escalating US-Iran strikes, including attacks on energy infrastructure, which had largely extinguished hopes for eased tensions and normalized shipping through Hormuz.
The proposed 20% transit charge sparked immediate concern, as it would amount to approximately $32 million for a fully loaded supertanker at current oil prices, significantly exceeding Iran's previous ad-hoc fees of up to $2 million per voyage. Analysts warned that increased shipping costs would likely translate to higher crude prices. The international shipping industry reacted with surprise and skepticism, with a shipping captain likening the fee to "highway robbery." The International Maritime Organization reiterated its opposition to charging fees for passage through international straits, and the White House did not immediately provide details on the fee's administration or if it had been discussed with Gulf allies.
Despite the initial surge, oil prices later pared some gains after Trump nuanced his stance on the 20% fee, stating the US would be "fair" and that the waterway would "remain OPEN." However, the reinstitution of the blockade by the US Central Command, effective Tuesday, and Trump's earlier comments about striking Iran "very hard" overnight deepened geopolitical risk. This fresh uncertainty restored a geopolitical risk premium to crude markets, even after a June interim US-Iran peace agreement had led to a retreat in prices. Analysts like Saul Kavonic of MST Marquee suggested that oil could reach $100 per barrel if the conflict expanded to target key facilities more broadly.
