Trump declares war on Iran, reinstates Hormuz blockade with 20% fee

President Donald Trump formally notified Congress on July 10 that the US is again at war with Iran, reinstating a naval blockade of the Strait of Hormuz with a 20% cargo fee that sent Brent crude up 9.5%.

"The Hormuz Strait is OPEN, and will remain OPEN, with or without Iran," Trump said on Monday, announcing the reinstated blockade. "We are reinstating the THE IRANIAN BLOCKADE, so named because it is only stopping Iran's ships or customers from entering or leaving."

Brent crude futures jumped 9.5% to trade above $83 per barrel, while WTI crude topped $78 — levels not seen in nearly a month. The blockade, set to begin at 4 p.m. ET on Tuesday, will see the US military "enforce the blockade against vessels transiting to or from Iranian ports and coastal areas," US Central Command said. Voyages through the waterway fell 52% week-on-week over the weekend, according to intelligence firm Kpler, which also noted a shift toward "dark" crossings with location beacons turned off.

The Strait of Hormuz handles roughly a fifth of global crude shipments, and the renewed blockade threatens to reignite the supply-driven price spikes that pushed both benchmarks above $100 per barrel in March. With governments and private industry having drawn down oil inventories over five months of conflict, and Chinese refineries showing signs of re-entering the market, the supply cushion is thinner than at the war's outset.

Oil Markets Test a Thinner Supply Buffer

The current price surge remains well below the wartime highs of March, when Brent briefly exceeded $100 and WTI traded above $95. Futures markets indicate Brent is expected to trade near $80 per barrel in December, suggesting traders see limited further upside under current conditions. But the supply backdrop has shifted materially since the war began on Feb. 28.

Coming into the first wave of conflict, the global economy was well oversupplied with oil, and China — the world's largest crude importer — had drastically slowed purchases. After five months of hostilities, those buffers have been drawn down. Data shows an uptick in crude imports by Chinese refineries, signaling the country may be re-entering the market as a meaningful buyer.

The last time the US imposed a blockade on Iran during the initial conflict in April, US Central Command said it redirected more than 140 compliant vessels, disabled nine non-compliant vessels, and allowed crossings by more than 50 commercial vessels supporting humanitarian aid. That blockade ran from April 13 to June 18 before the ceasefire took hold.

Asian Oil Stocks Surge on Supply Fears

The escalation triggered broad gains across energy equities in Asia. Shandong Molong Petroleum Machinery Co. jumped 14.81% in Hong Kong, while Petro-King Oilfield Services rose 13.13%. Sinopec Oilfield Service Corp. added 5% and China Oilfield Services gained 2.99%. Among the major Chinese producers, Cnooc Ltd. rose 2.07%, PetroChina Co. advanced 2.7% and Sinopec Corp. edged up 0.24%.

The war has also drawn congressional pushback. The Senate voted 50-48 in June to end hostilities, with four Republicans joining Democrats, following a 215-208 House vote earlier that month. Both measures were concurrent resolutions — legally untested and not subject to a presidential signature — limiting their practical impact. Trump's formal notification to Congress restarts a 60-day clock under the War Powers Resolution, though the administration has previously argued that the ceasefire had negated that deadline.

Iran said Monday the peace agreement has "undoubtedly entered a crisis phase" and that it will not abide by the required terms if the US continues its military campaign. The Persian Gulf Strait Authority, set up by the Iranian government as a regulatory body, said passage through the strait is "currently unfeasible."

This article is for informational purposes only and does not constitute investment advice.