Crude oil prices surged sharply on Monday, with the US benchmark climbing above $100 a barrel following the collapse of peace negotiations between the United States and Iran. The increase was further fueled by US President Donald Trump’s announcement of a naval blockade targeting Iranian ports.
At the start of trading, West Texas Intermediate (WTI) for May delivery rose approximately 8%, reaching $104.50 per barrel. Meanwhile, the international benchmark Brent crude for June delivery increased by 7%, hitting $102 per barrel.
In Asian markets, South Korea’s Kospi index initially dropped 2% before making a slight recovery, while Japan’s Nikkei declined by 0.3%. This movement came after oil prices had fallen and stock markets rallied last week, following a tentative two-week ceasefire brokered by Pakistan. However, the ceasefire’s fragility became evident as Israeli strikes continued in Lebanon and the Strait of Hormuz remained effectively closed.
The US dollar strengthened to its highest level in a week during early Asian trading, gaining broadly against most major currencies. The US dollar index, which tracks the greenback against six other currencies, rose by as much as 0.5% to 99.187, its peak since April 7. The euro weakened by 0.5% to $1.1667, the British pound dropped 0.6% to $1.3383, the Australian dollar fell 0.8% to $0.7014, and the New Zealand dollar declined 0.7% to $0.5798.
In a significant development, President Trump declared on Sunday that the US Navy would initiate a blockade of the Strait of Hormuz following unsuccessful marathon talks with Iran aimed at ending the conflict. This move threatens the fragile ceasefire and escalates tensions in the region. The US Central Command confirmed that the blockade of all maritime traffic entering and leaving Iranian ports would commence at 10 a.m. Eastern Time (7 p.m. Pakistan Standard Time) on Monday.
Analysts at Westpac noted that early, thin foreign exchange trading reflected a risk-averse sentiment, with the broad rally in the US dollar responding to the heightened geopolitical uncertainty.
