U.S. naval blockade and markets

President Donald Trump said on April 12 that the United States Navy would begin blockading the Strait of Hormuz after talks with Iran in Islamabad collapsed without a deal. (cnbc.com) United States Central Command said the blockade would start at 10 a.m. Eastern on Monday, April 13, and would apply to vessels of all nations entering or leaving Iranian ports and coastal areas. (cnbc.com) Oil prices jumped as trading opened for the week, with reports from April 13 saying Brent and West Texas Intermediate both moved above $100 a barrel and gained roughly 7% to 8%. (thehindu.com) Investors also moved into the United States dollar, while Treasury yields rose as traders repriced inflation risk tied to higher fuel costs and a wider Middle East war. (cnn.com) The Strait of Hormuz is a narrow shipping lane between Iran and Oman, and the United States Energy Information Administration said about 20.9 million barrels a day moved through it in the first half of 2025. That equals about 20% of global petroleum liquids consumption and one-quarter of seaborne oil trade. (eia.gov) The International Energy Agency said about 20 million barrels a day, or roughly 25% of world seaborne oil trade, normally transit the strait, and about 80% of those flows head to Asia. It also said only 3.5 million to 5.5 million barrels a day can be redirected through pipelines that bypass the waterway. (iea.org) That leaves importers with little room to reroute cargoes if naval action slows or stops tanker traffic. The United States Energy Information Administration also said about 20% of global liquefied natural gas trade passed through the strait in 2024, mostly from Qatar. (eia.gov) Federal Reserve research has found that oil shocks can feed into underlying inflation over time through the broader economy, even when the direct pass-through is limited. (federalreserve.gov) Trump said the move followed failed negotiations over the Iran war, while Iranian officials called the planned blockade illegal and warned it would widen the conflict. Live coverage on April 13 showed both sides framing the next 24 hours around whether shipping could continue without direct clashes at sea. (usatoday.com) The next test is whether the blockade remains limited to Iranian-linked shipping or pulls in commercial vessels from other countries. Oil, currencies and bond markets were already treating April 13 as a day when a military order at one chokepoint could reset prices worldwide. (bloomberg.com)