Oil price tops $120 a barrel after Trump warns Iran blockade could last ‘months’ | Global economy
The price of Brent oil rose above $126 per barrel on Wednesday, reaching its highest level since 2022. Donald Trump warned that the US blockade of Iranian ports could last for months and that peace talks were blocked.
Brent crude oil, which increased by more than 13 percent in 24 hours, reached a record price since the war started on February 28. Brent had not risen above $120 since Russia’s invasion of Ukraine in 2022, and the price had risen to $139 at that time.
Oil markets were spooked this week as Donald Trump appeared willing to continue the US Navy’s blockade of Iranian ports, which Iran responded to by keeping the Strait of Hormuz virtually closed to other oil tankers.
US-Iran talks scheduled for Islamabad in Pakistan over the weekend did not take place, so the stalemate continues.
Trump said Wednesday that Iran “better act smart soon,” and discussed what steps could be taken in a meeting with oil executives to “maintain the current blockade for months if necessary,” according to a White House official.
U.S. officials hope the blockade will force Iran to shut down oil wells and halt production when oil facilities such as Kharg Island are filled to the brim. Analysts aren’t sure how long this might last.
“The blockade is a little more effective than the bombing,” Trump told Axios. “They’re suffocating like a stuffed pig.”
Despite Trump’s prediction of a 4-6 week conflict before the collapse of Tehran, the war is about to enter its 10th week. Every day the strait is blocked, global oil supply decreases by approximately 20 million barrels.
Oxford Economics warned blog post It was stated that a six-month stalemate in the Bosphorus could cause oil prices to rise to $190 by August.
Jim Reid, market strategist at Deutsche Bank, said the jump in oil prices was fueling “growing fears of a prolonged stagflation shock” and driving up government bond interest rates – or yields.
“Overnight we saw Japan’s 10-year yield rise to 2.51%, which would be the highest closing level since 1997. It was a similar story in Europe; [German] While the bond yield reached 3.11%, its highest level after 2011, the 10-year [UK] Reid added that gilt yields reached 5.07%, the highest level since 2008.
Economist Paul Krugman, a former New York Times columnist, said he believes most analysts are “too optimistic” about the effects of the protracted Hormuz crisis.
“In my view, if the strait remains closed for, say, another three months, a full-blown global recession is more likely than not, which seems quite possible,” he wrote. bottom stack On April 20.
During the global financial crisis in 2008, oil rose to record levels and crude oil briefly reached $147. Two weeks after the US and Israel launched their first attack on Iran, Tehran said the world should prepare for 200 barrels of oil.
The effects of the supply shock extended beyond the rise in oil prices to the global economy, causing inflation to rise and sparking some fears of an impending global recession.
Inflation in the US rose in March; prices increased by 3.3% during the year. On the other side of the Atlantic, Britain faces a £35bn economic hit and the risk of a recession in 2026 due to war, a think tank has warned.
While Congress questioned U.S. defense secretary Pete Hegseth about the rising costs and strategy of the war, Iran’s foreign minister, Abbas Araghchi, spent the day calling India, Kenya and Poland, trying to drum up support for his country’s rivalry with the United States.
