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By Efua Nessa
Oil prices have surged following reports that the US is preparing for an extended blockade of Iran, causing concern over global oil supply disruptions.
Brent crude, the global oil benchmark, rose above $120 per barrel on Wednesday, briefly reaching $122, marking its highest price since 2022. The price hike follows a meeting between US President Donald Trump and energy executives, including Chevron CEO Mike Wirth, at the White House on Tuesday, April 28. The discussions, centered on limiting the economic fallout from the conflict, appeared to signal that the closure of the Strait of Hormuz—key to global oil shipments—could persist for a prolonged period.
The meeting, described by a White House official as part of Trump’s regular discussions with energy leaders, focused on topics including domestic energy production, progress in Venezuela, oil futures, natural gas, and shipping.
The price of oil has fluctuated sharply since the onset of the war, particularly due to the ongoing closure of the Strait of Hormuz. Iran has restricted shipping through the strait, which typically handles about 20% of the world’s oil and liquefied natural gas, in response to US and Israeli airstrikes that began on February 28. Earlier this month, Tehran warned that any vessel approaching the strait would be targeted, and the US pledged to intercept or turn back vessels traveling to or from Iran’s ports.
Reports from the Wall Street Journal indicate that President Trump has instructed aides to prepare for a long-term blockade of Iran’s ports as a way to further squeeze the country’s economy. Iran has stated it will continue disrupting traffic in the strait in retaliation for the blockade, although it claims to be using alternative trade routes.
The impact of the conflict on global oil prices remains substantial. Despite some fluctuation, Brent crude prices remain significantly higher than before the conflict began. The price dropped to $90 per barrel on April 17 after a ceasefire between Israel and Lebanon was announced, but it has been steadily rising over the past 12 days as the US blockade continues.
Lindsay James, an investment strategist at Quilter, warned that continued disruptions could lead to physical shortages and further price hikes on a range of goods, particularly in the UK, where petrol and diesel prices have already risen.
Meanwhile, the Iranian economy is facing increasing strain, with inflation surging to 53.7% and the country’s currency, the rial, plummeting to a record low. The Iranian government has reported that around two million Iranians have lost their jobs due to the ongoing conflict.
On Wednesday, President Trump urged Iran to “get smart soon” and sign a deal, following deadlock in efforts to resolve the conflict. According to US officials, Trump has decided to extend the blockade rather than resume bombing or walk away from the conflict, as these options carried higher risks.
While Iranian officials assert they can withstand the blockade through alternative trade routes, the impact on the country’s oil exports is evident. The World Bank has forecasted a 24% rise in global energy prices in 2026, with prices reaching their highest level since Russia’s invasion of Ukraine four years ago, should the disruption continue into May.
As the global market reacts, European stocks fell on Wednesday, with the FTSE 100 in the UK down by 1.2%, France’s CAC 40 dropping 0.39%, and Germany’s DAX index declining by 0.27%. In contrast, Asian markets mostly rose, continuing their recovery after the initial shock from the conflict.
Kathleen Brooks, research director at XTB, noted that financial markets now face the challenge of pricing in the possibility of a prolonged blockade and its impact on global oil prices.