Gulf crisis escalates
Negotiations between the U.S. and Iran in Islamabad collapsed, and President Trump said he would direct a U.S. naval blockade of the Strait of Hormuz—putting the main global oil route at risk. (apnews.com) The talks reportedly ended after a 21-hour session with no nuclear agreement, and the administration also threatened a 50% tariff on China if it provides military support to Iran. (gulfnews.com) Markets are jittery: volatility has risen and consumer sentiment registered its worst reading in about 50 years amid tariff and trade fears. (webanditnews.com)
President Donald Trump said on April 12 that the United States Navy would begin blockading the Strait of Hormuz after U.S.-Iran talks in Islamabad ended without a deal. (apnews.com) Vice President JD Vance said the negotiations lasted 21 hours and ended early Sunday, April 12, with no agreement on U.S. terms for Iran to forswear a nuclear weapon. Pakistan hosted the talks, and Vance said he had been in repeated contact with Trump during the session. (apnews.com) Iran’s side said the discussions were “intensive” but accused Washington of making “excessive demands and unlawful requests.” Reporting from Islamabad said the agenda covered both Iran’s nuclear program and the future of shipping through the Strait of Hormuz. (gulfnews.com) The strait is a narrow sea lane between Iran and Oman that carries about 20 million barrels a day of oil and petroleum products, equal to roughly one-fifth of global petroleum liquids consumption in 2024. The United States Energy Information Administration said it also handled more than one-quarter of global seaborne oil trade. (eia.gov) The International Energy Agency says about 80% of the oil moving through Hormuz is headed to Asia, and only 3.5 million to 5.5 million barrels a day can be rerouted through pipelines that bypass the waterway. Qatar and the United Arab Emirates also send most of their liquefied natural gas exports through the same passage. (iea.org) Trump also threatened a 50% tariff on any country that supplies military weapons to Iran, a warning his aides have aimed chiefly at China. He posted that there would be “no exclusions or exemptions,” though Politico reported this week that the legal basis for such a tariff is unclear. (politico.com) The market backdrop was already fragile before Sunday’s blockade threat. The University of Michigan’s preliminary consumer sentiment reading for April fell to 47.6 from 53.3 in March, the lowest level in the survey’s history, according to reports citing the April 10 release. (axios.com) Stock-market volatility has also stayed elevated. The Cboe Volatility Index closed at 19.23 on April 10, according to Yahoo Finance, after the Federal Reserve Bank of St. Louis published recent daily VIX data through April 9. (finance.yahoo.com; fred.stlouisfed.org) A naval blockade of Hormuz would put the White House in direct control of the world’s most important oil chokepoint just as a two-week ceasefire with Iran was already under strain. The next test is whether Washington follows Trump’s April 12 order with actual interdictions at sea, or whether diplomacy resumes before ships are stopped. (apnews.com; apnews.com)
