Shafaq News
Oil prices climbed above $100 abarrel on Monday as the U.S. Navy prepared to block ships to and from Iran viathe Strait of Hormuz, a move that could restrict Iranian oil exports, afterWashington and Tehran failed to reach a deal to end the war.
Brent crude futures rose $6.96, or7.3%, to $102.16 a barrel by 0430 GMT after settling 0.75% lower on Friday. U.S. West Texas Intermediate was up $8.12, or 8.4%, at $104.69 a barrelfollowing a 1.33% loss in the previous session.
"The market is now largely backto conditions before the ceasefire, except now the U.S. will block theremaining up to 2 million barrels per day Iranian-linked flows through theStrait of Hormuz as well," said Saul Kavonic, head of energy research atMST Marquee.
President Donald Trump said onSunday the U.S. Navy would start blockading the Strait of Hormuz, raising thestakes after marathon talks with Iran failed to reach a deal to end the war,jeopardising a fragile two-week ceasefire.
He added that the price of oil andgasoline may remain high through November's midterm elections, a rareacknowledgement of the potential political fallout from his decision to attackIran six weeks ago.
"The mere threat of enforcementalone has been sufficient to re-price risk, demonstrating how vulnerable oilremains to geopolitical triggers," said Priyanka Sachdeva, a seniormarket analyst at Phillip Nova.
"The return to triple-digitpricing, or the jump in a geopolitical risk premium that briefly faded duringearlier ceasefire headlines, looks justified," Sachdeva added.
U.S. Central Command said U.S.forces would begin implementing the blockade of all maritime traffic enteringand exiting Iranian ports at 10 a.m. ET (1400 GMT) on Monday.
It would be "enforcedimpartially against vessels of all nations entering or departing Iranian portsand coastal areas, including all Iranian ports on the Arabian Gulf and Gulf ofOman," a CENTCOM statement on X said.
U.S. forces would not impede freedomof navigation for vessels transiting the Strait of Hormuz to and fromnon-Iranian ports, it added.
IG market analyst Tony Sycamoresaid the move would effectively choke off the flow of Iranian oil, forcingTehran's allies and customers to apply the necessary pressure to get thewaterway reopened.
Iran's Revolutionary Guards said onSunday that any military vessels attempting to approach the Strait of Hormuzwould be considered a violation of the two-week U.S. ceasefire and be dealtwith harshly and decisively.
Despite the stalemate, threesupertankers fully laden with oil passed through the Strait of Hormuz onSaturday, shipping data showed. They appeared to be the first vessels to exitthe Gulf since the ceasefire deal was struck last week.
Oil tankers are steering clear ofthe Strait of Hormuz ahead of the U.S. blockade on Iran, shipping data onLSEG showed.
On Sunday, Saudi Arabia said it hasrestored full oil pumping capacity through the East-West pipeline to about 7million barrels per day, days after providing an assessment of damage to itsenergy sector from attacks during the Iran conflict.
(REUTERS)
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