Oil tops $100 again as ceasefire talks collapse

Oil prices have rebounded to over $100, after ceasefire talks between Iran and the US collapsed shortly after they had started.

WTI crude futures jumped around 10% to $104 early on Monday, after Donald Trump announced the US would blockade Iranian ships’ passage in the Strait of Hormuz in retaliation to Iran’s own blockade, putting a further stranglehold on the world’s oil supply. Prices remain below the $110–$115 high seen in early April.

“So, there you have it, the meeting went well, most points were agreed to, but the only point that really mattered, NUCLEAR, was not. Effective immediately, the United States Navy, the finest in the world, will begin the process of BLOCKADING any and all ships trying to enter, or leave, the Strait of Hormuz,” Trump posted on Truth Social.

The US siege will seek to cut off the limited traffic making it out of the Strait of Hormuz, which in peacetime hosted 20% of the world’s oil trade. Since Iran began its blockade in late March, almost all of the traffic through the strait has been Iran-linked. According to CNBC, Iran has sent 11.7 million barrels of crude oil through the waterway since the war began.

Any further blow to world oil supply will make input costs signfiicantly higher for UK food producers. The FDF’s estimate the UK would hit 9% food inflation in 2026, made at the end of March, had accounted for an end to hostilities by mid-April.

“The situation remains unprecedented and with oil prices surging again this week, it’s hard to say how high this number could climb,” said FDF chief economist Liliana Danila.

Asian and European markets faltered at the news of Trump’s blockade, which trimmed down gains made on the ceasefire’s announcement on 8 April, but investors have not lost hope for a resolution, according to Russ Mould, investment director at AJ Bell.

“The failure of initial talks between the US and Iran cannot be counted as a huge eye-opener, but Donald Trump’s threat to launch a US blockade of the Strait of Hormuz might not have been on the market’s bingo card,” he said.

“Investors are trying to gauge whether a fragile ceasefire will hold, and they are waiting to see the next moves from Tehran and Washington.”

The FTSE 100 was down just 0.4% by mid-morning.

Trump said the 20-hour meeting between US and Iranian envoys had made strong progress on agreeing to Iran’s 10-point list of conditions for peace – all bar its demand to be able to continue its uranium enrichment programme, which the US fears would allow Iran to develop nuclear weapons.

He posted: “My three representatives, as all of this time went by, became, not surprisingly, very friendly and respectful of Iran’s representatives, but that doesn’t matter because they were very unyielding as to the single most important issue and, as I have always said, right from the beginning, and many years ago, IRAN WILL NEVER HAVE A NUCLEAR WEAPON!”