Oil Rallies With Gas as US Blockade of Hormuz Escalates Crisis

Article content(Bloomberg) — Oil and natural gas surged as the US moved to blockade the Strait of Hormuz after weekend talks between Washington and Tehran failed to reach a deal, escalating a global energy crisis that’s rocked markets.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentGlobal benchmark Brent rallied as much as 8.6% to above $103 a barrel, while European gas futures spiked almost 18% at one point. US forces will begin implementing the blockade, which applies only to vessels entering or departing Iranian ports, from 10 a.m. New York time Monday, the US Central Command said.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentGlobal energy markets have been upended by the war in the Middle East, with higher oil and gas prices threatening to stoke inflation while slowing economic growth. There’s now a desperate scramble among refiners and traders around the world for immediately available crude cargoes as physical supplies tighten.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentHormuz, which links the Persian Gulf to global markets, has been effectively closed since US and Israeli strikes on Iran began in late February. Tehran has frustrated the White House by tightening its grip on the waterway, imposing payments for some vessels and keeping traffic at a fraction of pre-war levels.Article content“It strikes me that that is quite an ambitious endeavor, and it doesn’t solve the problem of disruption,” Mona Yacoubian, director of the Middle East Program at the Center for Strategic and International Studies, said of the US blockade plan. “It’s hard to make sense of it.”Article contentTransits through the strait had seen an uptick on Saturday. On Sunday, however, two vessels attempted to make their way through the narrow waterway only to abruptly U-turn as negotiations in Islamabad collapsed.Article contentArticle contentPresident Donald Trump threatened to retaliate in the event of resistance to the blockade. “Any Iranian who fires at us, or at peaceful vessels, will be BLOWN TO HELL!,” he said. In addition to the naval action, the US leader and advisers are looking at resuming limited strikes, the Wall Street Journal reported.Article contentIf Iran did feel that its oil exports were threatened, it may push Houthi forces in Yemen to target transit through a chokepoint at Bab el-Mandeb, at the southern entrance to the Red Sea, Yacoubian said. The Houthis entered the war in late March, and have the capacity to disrupt shipping.Article content“Then, you really are in a world of hurt,” she said. “Experience suggests that the Iranians will not concede, but will respond in kind.”Article contentOil flows via the Red Sea have become more important since the war erupted as Saudi Arabia boosted pipeline flows across the country to the port of Yanbu. On Sunday, Riyadh said it had restored full capacity through the East-West pipeline, as well as output from the Manifa field after Iranian strikes. Article content“The market got ahead of itself on de-escalation,” said Haris Khurshid, chief investment officer at Karobaar Capital LP in Chicago, adding that the US blockade threatens slower shipping, delayed cargoes and costlier insurance. “That’s what actually tightens the market and shows up in the price.”Trending GFL Said to Near Deal to Buy Secure Waste for Over $4.3 Billion PMN Business Posthaste: More Canadians desperate for tax refund to plug holes in their finances News How the global energy crisis is shaking Canada from coast to coast — and could leave a lasting legacy Oil & Gas Britain Faces Another Lost Year for Living Standards Due to Iran War PMN Business Oil Tankers U-Turn in Hormuz as US-Iran Talks Break Down PMN Business Article contentProducer group OPEC — which has already warned that damage to Middle East energy assets will have a prolonged impact on supply even after the war ends — is due to publish its monthly market report later Monday, potentially offering fresh insight into the extent of the disruption. Article contentThe breakdown in the US and Iranian talks represents a significant setback after a fragile ceasefire was agreed last week. Tehran characterized US demands as “excessive,” according to the semi-official Tasnim agency. US Vice President JD Vance said Washington’s core goal was a commitment from Iran not to seek a nuclear weapon, but returned home without it.Article content—With assistance from Rob Verdonck.Article contentShare this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. GFL Said to Near Deal to Buy Secure Waste for Over $4.3 Billion PMN Business Posthaste: More Canadians desperate for tax refund to plug holes in their finances News How the global energy crisis is shaking Canada from coast to coast — and could leave a lasting legacy Oil & Gas Britain Faces Another Lost Year for Living Standards Due to Iran War PMN Business Oil Tankers U-Turn in Hormuz as US-Iran Talks Break Down PMN Business