Key Takeaways:
Trump's reinstated Iran blockade and 20% Strait of Hormuz toll has shattered the fragile US-Iran peace framework, sending oil prices surging.
Trump effectively ended the US-Iran interim peace deal Monday by reinstating a naval blockade on Iran in the Strait of Hormuz and imposing a 20% toll on all cargo transiting the waterway, sending Brent crude up more than 3%.
"We had a deal. It was a done deal, and then they broke it," Trump said in a phone interview on Fox News' "Fox & Friends" program. "We're going to guard it. We're going to get paid for guarding it — a lot of money."
Brent crude jumped more than 3% Monday on fears of prolonged disruption to the waterway, which handled about a fifth of global oil and liquefied natural gas shipments before the conflict. US benchmark West Texas Intermediate traded at around $72.92 a barrel, well below the nearly $120 peak reached at the height of the war in February but up sharply from recent levels. Shipping traffic through the strait declined about 52% over July 10-12 compared with the prior week, according to MarineTraffic.com.
The collapse of the 60-day interim framework — signed last month to reopen the strait and halt hostilities — raises the prospect of a prolonged blockade that could keep oil prices elevated and stoke inflation globally. Prediction markets now price only an 18.5% probability of Strait of Hormuz traffic returning to normal by Aug. 31, down from 22% a day earlier, according to Vera data.
Iran's Revolutionary Guards rejected Trump's assertion of control over the waterway, calling the strait "our territory" and warning that "continued interference could lead to greater incidents in the global oil and gas sector." Iran's top negotiator, Mohammad Baqer Qalibaf, posted on X that "the era of one-sided deals is OVER."
The US military said it struck dozens of Iranian sites Monday, including air defense systems, radar installations, and missile and drone equipment, while Iran retaliated by targeting US military facilities in Bahrain, Kuwait, Qatar, Jordan and Oman. At least two people were killed in Abadan in southwestern Iran, state media reported.
The last time the US and Iran engaged in direct hostilities of this scale was during the initial weeks of the war in late February, when oil prices surged past $120 a barrel and global equity markets entered a risk-off cycle that pushed the VIX above 35. The current VIX level was not immediately available, but the pattern of cross-asset contagion — higher crude, weaker equities, a stronger dollar — mirrors that earlier episode.
Iran's Foreign Ministry said it was seeking a joint mechanism with Oman to manage strait traffic, accusing US pressure on Oman of hindering discussions. The European Union's top diplomat, Kaja Kallas, called for the strait to remain open, saying "freedom of navigation has to be respected."
The blockade and transit fee represent a sharp escalation from the interim deal's framework, which had envisioned a phased reopening of the strait under international supervision. With both sides now trading heavy fire and diplomatic channels strained, the path back to negotiations appears increasingly narrow.
This article is for informational purposes only and does not constitute investment advice.
