Crude oil shoots up 8% above $100 on peace talks deadlock, Trump naval blockade plans

The US oil benchmark rebounded above $100 a barrel on Monday after peace talks between the United States and Iran failed to make a breakthrough, and with US President Donald Trump ordering a blockade of Iranian ports.

Shortly after trading began, a barrel of West Texas Intermediate for May delivery rose around 8% to $104.50, while June delivery of international benchmark Brent rose 7% to $102.

In early trade in Asia, South Korea’s benchmark Kospi index fell 2%, before recovering slightly, while Japan’s Nikkei was down 0.3%.

Oil prices had sunk, and stocks soared last week after Trump agreed to a two-week ceasefire mediated by Pakistan, despite its tenuousness becoming quickly apparent as Israel continued to strike Lebanon and the Strait of Hormuz remained effectively closed.

The dollar also strengthened to the highest level in a week in a broad rally against most of its peers in early Asian trade on Monday.

The US dollar index, which measures the greenback’s strength against a basket of six currencies, was up as much as 0.5% at $99.187, its highest level since Apr 7.

The euro was down 0.5% at $1.1667 as the British pound fell 0.6% to $1.3383, while the Australian dollar was 0.8% lower at $0.7014 and the New Zealand dollar was off 0.7% at $0.5798.

US President Donald Trump said on Sunday that the US Navy would start blockading the Strait of Hormuz after marathon talks with Iran failed to reach a deal to end the war, jeopardising a fragile two-week ceasefire.

The US Central Command said US forces would begin implementing the blockade of all maritime traffic entering and exiting Iranian ports from 10am ET (7pm, Pakistan standard time) on Monday.

“Early and thin FX trading this morning is showcasing a risk-off mood, with the broad-based rally in the USD in response,” analysts from Westpac wrote in a research note.