Oil tops $100 as Trump orders Hormuz blockade; WTI seen rising

Crude oil prices jumped over $100 per barrel at the start of the week on Monday as the US prepared to block vessels from transiting to and from the Strait of Hormuz, thereby limiting Tehran’s exports.

Both Brent and West Texas Intermediate crude oil benchmarks surged more than 7% and 8% to above $100 a barrel.

At the time of writing, the Brent contract was at $102.15 a barrel, up 7.3%, while WTI was 8.4% higher at $104.65 a barrel.

Oil benchmarks maintain bullish bias

WTI US Oil currently maintains a near-term bullish bias, trading around its current level on the daily chart.

This is supported by the price holding firmly above its 20-day exponential moving average.

“The distance from this rising EMA suggests underlying trend support remains intact, while the Relative Strength Index (14) at 56.23 has eased out of overbought territory, hinting that upside momentum is moderating rather than reversing,” Sagar Dua, editor at FXStreet, said in a report.

If WTI prices continue to trade around this level, there is a likelihood of the benchmark eventually topping the $106 per barrel level in the near-term.

Trump orders Strait of Hormuz blockade

Oil prices rose following a warning from US President Donald Trump to block the Strait of Hormuz.

In a post on Truth Social, Trump stated he has instructed the Navy to blockade "any or all ships trying to enter or leave" the Strait of Hormuz, a crucial strait responsible for the passage of nearly 20% of the world's energy supply.

Iran's refusal to abandon its nuclear aspirations led to the breakdown of talks with US Vice President JD Vance.

Following this failure, Trump threatened to blockade the Strait of Hormuz.

President Trump has also directed the US Navy to "seek and interdict every vessel in International Waters that has paid a toll to Iran."

He further declared that "no one who pays an illegal toll will have safe passage on the high seas."

"The market is now largely back to conditions before the ceasefire, except now ​the US will block the remaining up to 2 million barrels per day Iranian-linked flows through the Strait of Hormuz as well," Saul Kavonic, head of energy research at MST Marquee, was quoted in a Reuters report.

Acknowledging the possible political repercussions of his decision to attack Iran six weeks prior, Trump stated that high prices for oil and gasoline are likely to persist through the November midterm elections.

According to Priyanka Sachdeva, a senior market analyst at Phillip Nova, oil's susceptibility to geopolitical events is evident:

Enforcement, Iranian warning, and mitigation

At 10 a.m. ET (1400 GMT) on Monday, US forces, under the direction of the Central Command, will enforce a blockade on all maritime traffic to and from Iranian ports.

It would be "enforced impartially against vessels of all nations entering or departing Iranian ports and coastal areas, including all Iranian ports on the Arabian Gulf and Gulf of Oman," a CENTCOM statement on X said.

The US forces further stated that they would not obstruct the freedom of navigation for vessels traveling through the Strait of Hormuz, provided these vessels were heading to or from ports outside of Iran.

The US blockade on Iran is imminent, causing oil tankers to avoid the Strait of Hormuz, according to LSEG shipping data.

This move, which IG market analyst Tony Sycamore believes will effectively halt the flow of Iranian oil, is intended to force Tehran's allies and customers to pressure Iran into reopening the vital waterway.

In response, Iran's Revolutionary Guards issued a stern warning on Sunday: any military vessel approaching the Strait of Hormuz will be viewed as a breach of the two-week US ceasefire and will be met with a harsh and decisive response.

Despite this escalating tension and stalemate, shipping data shows three supertankers loaded with oil successfully navigated the Strait of Hormuz on Saturday.

These appear to be the first vessels to exit the Gulf since the ceasefire agreement was reached last week.

Meanwhile, Saudi Arabia has reportedly restored the full pumping capacity of its East-West pipeline to seven million barrels a day (bpd).

This rehabilitation of a key crude oil export route via the Red Sea was reported by Bloomberg.