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Oil prices climb amid US blockade plans
Brent crude reached $117 per barrel on Wednesday, marking its highest level this month after reports emerged that the US is preparing to prolong its blockade of Iranian ports.
US strategy targets Iran's economy
The Wall Street Journal reported that President Donald Trump has directed advisors to extend the ongoing restrictions on Iran's ports, aiming to intensify economic pressure on Tehran. The move follows Iran's threat to disrupt shipping in the Strait of Hormuz, a critical route for global oil supplies.
Iran has warned that any vessel approaching the strait would face targeting, while the US has vowed to intercept ships traveling to or from Iranian ports. BBC Verify analysis indicates at least four vessels from Iranian ports have crossed the US blockade line.
Market reactions and economic fallout
Oil prices have fluctuated sharply since the conflict began, with the Strait of Hormuz effectively closed for weeks. The strait typically handles about 20% of the world's oil and liquid natural gas. Despite a brief dip to $90 per barrel on April 17 following a ceasefire between Israel and Lebanon, prices have steadily risen over the past 12 days.
"Every day without resumed supply increases the risk of physical shortages and steeper price hikes across a range of goods," said Lindsay James, investment strategist at Quilter.
Iran's deepening economic crisis
Iran's economy is grappling with severe challenges, including an annual inflation rate of 53.7%, according to the Statistical Center of Iran. The rial has plummeted to record lows, and approximately two million Iranians have lost jobs due to the conflict, the government reported last week.
On Wednesday, Trump urged Iran to "get smart soon" and negotiate a deal, describing the country as disorganized in a post on Truth Social. Iranian officials, however, claimed the country could endure the blockade by utilizing alternative trade routes.
Global economic outlook
The World Bank projected a 24% surge in energy prices for 2026, potentially reaching their highest levels since Russia's invasion of Ukraine in 2022, assuming the most severe disruptions from the Iran conflict end in May.
European markets declined on Wednesday, with the FTSE 100 dropping 0.73% and the pan-European Stoxx index down 0.4%. US markets opened slightly lower, while Asian stocks continued their recovery after initial war-related losses.
