Following unsuccessful marathon negotiations between the United States and Iran in Pakistan, the U.S. has declared a comprehensive blockade of the Strait of Hormuz, causing another severe shock to global energy supply chains. As a result, oil and natural gas prices have surged significantly. During early Monday trading in Asia, the international benchmark Brent crude price jumped over 8%, surpassing the $103 per barrel mark. European natural gas futures spiked as much as 18% at one point, sharply escalating market fears over supply disruptions in the Middle East.

It is understood that both sides confirmed the breakdown of talks, delivering a major blow to the fragile ceasefire agreement reached just last week. According to Iran’s semi-official Tasnim News Agency, Iran described the U.S. demands as "excessively harsh." U.S. Vice President JD Vance stated that Washington’s core objective was to secure Iran’s commitment not to pursue nuclear weapons, but that effort ultimately failed. In a recent statement, U.S. Central Command announced that American forces will formally begin the blockade of the Strait of Hormuz starting at 10 a.m. Eastern Time on Monday. The statement indicated that all maritime traffic entering and leaving Iranian ports will be blocked, applying to vessels of all nations, though it clarified that passage through the strait for ships traveling to and from non-Iranian ports will not be impeded.

This move marks a significant escalation in regional tensions since the U.S.-Israel joint military strikes against Iran in late February. Six weeks of conflict have already brought the key waterway, which handles about 20% of global liquefied natural gas trade, to a virtual standstill. Although tanker traffic showed a brief recovery over the weekend, the collapse of talks in Islamabad forced two vessels attempting to cross the strait to turn around urgently. Since the military strikes began, European natural gas prices have climbed more than 50% cumulatively. Although prices have retreated by about one-third from the intraday high reached on March 19 after Iran attacked Qatari LNG facilities, the latest blockade order is certain to reignite market supply anxiety.

While most LNG exports from the Middle East flow to Asian markets, the continued closure of the Strait of Hormuz is forcing European and Asian buyers to compete fiercely for the same limited pool of spot cargoes. LNG shipments through the strait have now been interrupted for over a month, leaving roughly 20% of global LNG supply at risk. As Europe prepares to enter a new gas storage refill cycle, any disruption on the supply side could trigger sharp price fluctuations.

In the crude oil market, global refiners and traders are engaged in intense competition to secure immediately available spot crude cargoes. Analysts warn that persistently high energy prices will exacerbate global inflationary pressures and further weaken already sluggish economic growth prospects. Mona Yacoubian, Director of the Middle East Program at the Center for Strategic and International Studies, expressed skepticism about the feasibility of the U.S. blockade plan. She noted, "This appears to be an extremely ambitious move, but it does not address the root cause of the shipping disruption. Based on past experience, Iran is unlikely to back down and will likely respond with retaliatory measures." Yacoubian specifically warned that if Iran feels its oil export lifeline is threatened, it could very well prompt Houthi forces in Yemen to launch attacks at the Bab el-Mandeb Strait at the southern entrance to the Red Sea, stating, "Global shipping would then face a real crisis."

U.S. President Trump struck a firm tone in a statement, vowing retaliation if the blockade is met with resistance: "Any Iranian who fires on American or peaceful vessels will be blown to hell!" In a related development, Saudi Arabia announced on Sunday that its East-West crude pipeline crossing the country and the Manifa oil field have fully restored transport capacity. However, this positive development has not been enough to fully offset the premium impact caused by geopolitical risks in the Hormuz region.