Oil prices rose, and stocks fell Sunday evening after peace talks between the United States and Iran ended without a deal overnight. Hours later, President Donald Trump announced plans to blockade the Strait of Hormuz.
It is not yet clear what that escalation will mean for the fragile ceasefire the countries agreed to last week, leaving no clear path to ending a war that is now entering its seventh week. That uncertainty continues to rattle investors eager for a path to stabilize the flow of oil and natural gas from the Gulf.
In attempting a blockade, Trump is repeating a playbook he used recently against Venezuela to cut that country off from a vital source of revenue. This time, he does not want Iran to use the strait, a vital waterway, for exports. U.S. Central Command clarified Sunday that U.S. forces would interfere only with vessels traveling to and from Iranian ports.
“We’re not going to let Iran make money by selling oil to people that they like,” Trump told Fox News.
Oil Rises Sharply
— Oil prices surged above $100 once more as markets opened Sunday evening.
— The price of Brent crude, the global benchmark for oil, rose more than 7% to around $102 a barrel.
— West Texas Intermediate crude, the U.S. benchmark, climbed more than 8% to about $105 a barrel.
— Investors and analysts are focused on the continued disruption to shipping in the Strait of Hormuz, the narrow waterway between Iran and Oman that is a vital trading route for oil and natural gas. As much as one-fifth of the world’s oil supply and substantial amounts of natural gas typically pass through the strait. But few vessels have attempted that trip since the war started of fear that Iran might attack.
Stocks Dip
— Futures on the S&P 500, which give investors a chance to bet on the market before exchanges open Monday morning, fell roughly 1%. The stock market had stabilized after a fragile ceasefire took hold last week, with the S&P 500 rising 3.6% for the week through Friday, its second consecutive week of gains.
Gasoline Prices Remain Elevated
— Gas prices were little changed Sunday, at a national average of about $4.13 a gallon, according to the AAA motor club. The rise in prices since the war began has raised the cost of regular gas for drivers by 38%.
— Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.
— Diesel prices have increased more quickly in recent weeks and stood at $5.66 on Sunday, up some 50% since the start of the war.
This article originally appeared in The New York Times.
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