Oil prices surged by more than 10% in early trading after reports that former U.S. President Donald Trump ordered a naval blockade of the Strait of Hormuz following the collapse of U.S.-Iran peace talks.
The sharp move reflects immediate market concerns over potential disruptions to global oil supply, as the Strait of Hormuz remains one of the most critical energy chokepoints in the world, responsible for a significant portion of global crude shipments.
Market participants reacted swiftly to the escalation, pricing in geopolitical risk premiums amid fears of further military confrontation or supply chain instability in the region.
Analysts warn that any prolonged disruption in the Strait could lead to sustained volatility in energy markets, with ripple effects across inflation, global trade, and financial markets.
The situation remains fluid, with traders closely monitoring developments for signs of escalation or de-escalation.