Oil surges above US$100, stocks fall after failed US-Iran talks
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.
A vessel at the Strait of Hormuz, off the coast of Oman’s Musandam province, April 12, 2026. REUTERS
HONG KONG: Oil prices surged and stocks sank Monday (Apr 13) after US-Iran peace talks fell apart and Donald Trump announced a blockade of the strategic Strait of Hormuz, adding to fears of energy supplies from the Middle East.
Oil prices - which tumbled last week after the United States and Iran agreed to a two-week ceasefire - jumped around 8 per cent Monday, with both contracts topping US$100 a barrel.
Equities fell across Asia, with Tokyo, Hong Kong and Seoul off at least 1 per cent, while Shanghai, Sydney, Singapore, Taipei and Jakarta were also down.
"The market is now largely back to conditions before the ceasefire, except now the US will block the remaining up to (2 million barrels) Iranian-linked flows through the Strait of Hormuz as well," said MST Marquee analyst Saul Kavonic.
"The key remaining question is if the U.S. renews strikes on Iran, raising the risk of strikes on energy infrastructure across the region, which could have a further lasting impact beyond the duration of the war."
In a lengthy social media post, Trump said his goal was to clear the strait of mines and reopen it to all shipping.
But he said that Iran must not be allowed to profit from controlling the waterway - through which a fifth of global oil and gas usually passes.
The US military said on Sunday it will blockade all Iranian Gulf ports on Monday at 2pm GMT (10pm, Singapore time), effectively seizing control of maritime traffic.
Iran's Revolutionary Guards said its security forces had full control over the strait and warned enemies would be trapped in a "deadly vortex" in case of any "wrong move".
Iran's navy chief Shahram Irani called Trump's threat "ridiculous and funny", according to state TV.
Fawad Razaqzada, a market analyst at Forex, said: "The fundamental issue remains trust - or rather, the lack of it - between two long-standing adversaries who still appear some distance from common ground."
Investors are also keeping an eye on attempts to resolve the conflict between Israel and Hezbollah, as Lebanese Prime Minister Nawaf Salam said he was pushing to ensure the withdrawal of Israeli forces.
The prospect of the Middle East crisis continuing for the foreseeable future ramped up inflation fears and weighed on gold amid expectations that interest rates would be kept elevated.
Data Friday highlighted the impact of the conflict on prices, with the US consumer price index spiking at 3.3 per cent in March, its highest since May last year.
With inflation fears reviving, investors are now bracing for central banks, such as the European Central Bank and Bank of England, tilting towards raising rates in a sharp reversal from pre-war bets on rate cuts or a prolonged pause.
