Oil prices jump 6% to above $100 a barrel on US blockade of Iran

NEW YORK: Oil prices jumped about 6% to more than $100 a barrel on Monday after the U.S. military said it will blockade ships leaving Iran’s ports, while Tehran threatened to retaliate against its Gulf neighbours’ ports, raising fears of more energy supply disruptions after weekend peace talks broke down.

Brent futures were up $5.76, or 6.1%, to $100.96 a barrel at 11:15 a.m. EDT (1515 GMT), while U.S. West Texas Intermediate (WTI) crude rose $5.69, or 5.9%, to $102.26.

Prices for physical crude barrels for immediate delivery to Europe were trading even higher, with some grades already at record highs of about $150 a barrel.

If U.S. President Donald Trump “does indeed back his blockade threat with actual boats, a convergence between the paper and physical markets may soon come,” said Helima Croft, an analyst at RBC Capital Markets.

Two Iranian-linked tankers exited the Gulf on Monday as other vessels began avoiding the Strait of Hormuz. The strait handles about 20% of global oil and liquefied natural gas flows.

Saudi Arabia said it restored full oil pumping capacity through the East-West pipeline to about 7 million barrels per day (bpd) after damage from Iranian attacks. The kingdom, however, said crude oil sales to China are set to fall in May as the war drives up prices and disrupts shipping.

Tankers exit Gulf via Strait of Hormuz as US-Iran talks begin

High prices hurt energy demand

The Organization of the Petroleum Exporting Countries (OPEC) lowered its forecast for world oil demand in the second quarter by 500,000 barrels per day, helping to pare earlier crude futures price gains.

Earlier in the trading session, Brent futures were up more than $8 a barrel and WTI was up more than $9.

India said it was likely to see below-average monsoon rains for the first time in three years in 2026, stoking concerns about farm output and growth in Asia’s third-largest economy as it battles inflation driven by the war.

Tehran says no one had expectation of reaching agreement with US in one session: state TV

Inflation is also a concern in Europe where European Central Bank Vice President Luis de Guindos said any ECB interest rate rise will depend on how a war-fuelled surge in the cost of crude oil and some chemicals impacts other prices.

Central banks like the ECB use interest rates to control inflation. Higher rates boost consumer costs and can slow economic growth and demand for oil.

European Union Commission President Ursula von der Leyen said member states must coordinate on energy prices amid a 22 billion euro ($25.70 billion) increase in fossil fuel bills since the start of the war.

The head of Italian energy group Eni suggested the EU reconsider its plans to progressively ban imports of Russian gas from the start of next year.

US negotiators leaving without a peace deal with Iran

In Germany, the coalition government agreed to give consumers and businesses about 1.6 billion euros ($1.9 billion) of fuel price relief, ending a dispute over how to respond to the recent oil price surge.

Bank of Japan Governor Kazuo Ueda said uncertainty over the Middle East conflict was keeping markets unstable and could hurt factory output, signalling the central bank’s escalating alarm over the economic hit from the war.