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Oil Jumps Above $120 as Trump Vows to Extend Iran Blockade

Traders are pricing in a long disruption to Gulf oil flows as talks with Tehran stall.

Overview

  • Brent crude surged to about $126 on Thursday after reports of a CENTCOM briefing on new Iran strike options and Trump’s rejection of Tehran’s Hormuz reopening proposal.
  • Trump said the U.S. naval blockade of Iranian-linked shipping will remain until a nuclear deal is reached, following Tuesday’s meeting with oil executives on how to keep it in place for months.
  • Iran kept tight controls on the Strait of Hormuz and warned the blockade is “doomed to fail,” while U.S. forces said they had redirected 42 would‑be violators and counted 41 tankers holding 69 million barrels unsold.
  • Goldman Sachs said flows through the strait have fallen to about 4% of normal and warned limited storage could force more production shut-ins if the standoff continues.
  • The UAE’s exit from OPEC on May 1 adds uncertainty to future supply management, with U.S. gasoline averaging about $4.30 a gallon as households feel higher fuel costs.