Oil prices surged 5% on Monday as former President Donald Trump reinstated the US blockade of Iranian shipping in the Gulf. This decision comes amidst escalating tensions between the US and Iran, raising concerns about the stability of oil supplies from the region.
Trump's New Policy on the Strait of Hormuz
On Monday, Trump announced that the US would charge a 20% toll on cargo passing through the Strait of Hormuz to cover the costs of “providing safety and security” in this critical trade route. In his social media post, he declared that the USA would be known as “THE GUARDIAN OF THE HORMUZ STRAIT.” This policy is expected to take effect immediately, further complicating the already tense situation in the region.
The price of Brent crude rose to $79.37 a barrel, reflecting the market's reaction to the renewed blockade. Analysts suggest that the uncertainty surrounding Gulf oil exports could lead to continued volatility in oil prices.
Impact on Global Markets
The announcement has caused significant ripples across global markets. In the US, tech stocks fell sharply, with the Nasdaq dropping by 1% and the S&P 500 down 0.4%. Similarly, Asian markets experienced declines, with South Korea's Kospi falling by 8% and Japan's Nikkei 225 and China's Shanghai Composite both down by 2%.
