- Starting from 14:00 GMT on April 13, the United States has imposed a blockade on ships entering and exiting Iranian ports and coastal areas, although it has not officially prohibited neutral vessels, heading to non-Iranian ports, from passing through the Strait of Hormuz. Consequently, the market's focus has shifted from "whether to completely close the strait" to "how much shipping efficiency and enforcement risks will decrease."
- International oil prices climbed back to $100 per barrel on Monday, with Brent nearing $102 and WTI rising to around $104. Meanwhile, the European spot price for North Sea Forties reached close to $148.87, indicating a stronger competition for deliverable resources in the spot market compared to futures trading.
- The drivers for the upward revision of market risk premiums are not only the restrictions on Iranian exports but also the re-pricing of insurance, freight, detour costs, and potential retaliatory actions. The UK has explicitly stated it will not partake in the U.S. blockade, further highlighting the inconsistencies within the Western bloc in terms of enforcement.
Market Pricing
Based purely on price performance, this rise cannot simply be equated to the market fully pricing in "$150 oil." The current trading reflects more of a state where Hormuz maintains low flow and high uncertainty in the coming months, rather than a complete halt for the year. In other words, the market is pricing in "supply disruptions," but has not fully shifted to the extreme scenario of "supply system failure." The significantly stronger spot prices compared to futures suggest that refineries, traders, and end buyers are more anxious about immediate deliveries than future prices.
Blockade Boundaries
The easiest aspect to misinterpret this time is the difference between the "blockade of Iranian port shipping" and the "complete blockade of the Strait of Hormuz." According to the public U.S. stance, the blockade targets ships related to Iranian ports and coastal areas, rather than all international merchant vessels passing through the strait. Hence, the more accurate current state of Hormuz is not absolute closure but a phase of "passable, but with higher costs, lower efficiency, and greater risks." For shipowners, the decision to continue transit involves not just route considerations but also a comprehensive judgment of insurance cover, crew safety, and potential seizure risks.
Policy and Risk
What truly warrants caution is not which round figure oil prices will momentarily hit, but the secondary impact that could be triggered by policy misjudgments. If the U.S. blockade escalates into more stringent maritime enforcement, Iran may extend its response to alternative export facilities, Gulf energy infrastructure, or even surrounding routes in the Red Sea and Gulf of Oman. Once the situation evolves from "partial shipping disruption" to "regional energy system damage," the market will face not only more expensive crude but prolonged inflation, tighter supply chains, and a simultaneous contraction in cross-asset risk appetite.
