Oil prices climb as US-Iran stand-off keeps Strait of Hormuz in limbo

Oil prices surged more than 5% while European markets fell on Monday morning due to a standoff between Iran and the US that blocked tanker passage through the Strait of Hormuz.

The Persian Gulf waterway was closed again after Iran reversed its decision to reopen the strait. US President Donald Trump said the US Navy blockade of Iranian ports remained in effect.

US benchmark crude rose 5.6% to $87.20 a barrel, while Brent crude, the international standard, increased 5.3% to $95.16 a barrel.

Meanwhile, European markets declined Monday morning: the UK's FTSE 100 dropped 0.4%, France's CAC 40 fell 1.1%, Germany's DAX declined 1.3%, and Italy's FTSE MIB was down 1.2%.

Despite concerns over the resumption of oil shipments from the Middle East, most Asian share prices were higher. In Tokyo, the Nikkei 225 gained 1% to 59,045.45; South Korea's Kospi rose 1.1% to 6,260.92; Hong Kong's Hang Seng added 0.8% to 26,373.71; the Shanghai Composite increased 0.6% to 4,075.08; Australia's S&P/ASX 200 was nearly unchanged at 8,943.90; and Taiwan's Taiex jumped 1.4%.

Stephen Innes of SPI Asset Management commented, “The problem for markets is not the absence of hope; it is the overpricing of it. The latest move higher in equities has started to feel less like conviction and more like momentum feeding on itself.”

On Friday, oil prices fell back to levels seen early in the Iran war, and US stocks reached a fresh record after Iran announced the strait was open again for commercial tankers. The S&P 500 rose 1.2% to an all-time high of 7,126.06, marking a third straight week of strong gains—the longest streak since Halloween. The Dow Jones Industrial Average surged 1.8% to 49,447.43. The Nasdaq composite climbed 1.5% to 24,468.48.

The US stock market has gained more than 12% since late March on hopes that the US and Iran can avoid a worst-case scenario for the global economy despite their conflict.

Oil prices declined after Iran’s foreign minister, Abbas Araghchi, posted on X that passage through the strait “is declared completely open” amid a fragile ceasefire in Lebanon. Benchmark US crude fell 9.4%, and Brent crude dropped 9.1%.

Following Araghchi's announcement, Trump said on his social media platform that the US Navy’s blockade of Iranian ports remained “in full force” pending a deal on the war, though he suggested that “should go very quickly in that most of the points are already negotiated.”

On Sunday, President Trump stated the US had seized an Iranian-flagged cargo ship attempting to bypass the naval blockade. Iran’s joint military command said Tehran would respond soon and called the US seizure an act of piracy.

A fragile two-week ceasefire between the US and Iran is set to expire on Wednesday, while rising tensions in the Strait of Hormuz raise questions about prospects for new talks to end the war.

Since the war began, market sentiment has fluctuated between optimism and gloom about when the fighting will end and the global economic impact. A strong start to the US corporate earnings season has supported stocks.

In other early Monday trading, the US dollar rose to 158.90 Japanese yen from 158.79 yen. The euro climbed to $1.1757 from $1.1742.