Global oil prices surged by almost 10% after United States President Donald Trump announced the reinstatement of a blockade on Iran and unveiled plans to impose a 20% charge on cargoes transported by vessels receiving U.S. military protection through the Strait of Hormuz, escalating fears of a prolonged disruption to one of the world's most critical energy corridors.
As at the time of writing 05:20 a.m. (WAT), Brent crude traded at $84.66 per barrel, up 1.63%, while West Texas Intermediate (WTI) stood at $79.61 per barrel, gaining 1.88%. During intraday trading on Monday, both benchmarks surged by more than 8%, lifting Brent from around $75 per barrel to above $85 and reversing nearly all the losses recorded after last month's ceasefire between Washington and Tehran.
The latest rally followed President Trump's decision to reimpose the blockade on Iran after renewed military exchanges between Washington and Tehran over the weekend. The announcement immediately forced traders to reprice geopolitical risks surrounding crude exports from the Middle East, particularly through the Strait of Hormuz, which handles about one-fifth of global seaborne oil shipments.
Monday's sharp rebound effectively erased most of the losses recorded after last month's ceasefire between the two countries, returning crude prices to levels not seen since the conflict temporarily eased. Analysts said the renewed confrontation has once again shifted market attention from oversupply concerns to fears of supply disruption.
Adding to market jitters, Trump announced that vessels receiving U.S. naval protection while transiting the Strait of Hormuz would be required to reimburse Washington through a 20% levy on cargoes, a move that could significantly increase shipping costs for crude oil and refined petroleum products.
The proposal immediately drew criticism from the International Maritime Organization (IMO), which argued that international law does not provide for compulsory transit charges through international waterways. Energy companies also opposed the measure, maintaining that unrestricted navigation through the Strait of Hormuz remains fundamental to global energy security and international trade.
Although physical oil exports have not yet suffered widespread disruption, market participants said crude prices often respond to geopolitical threats long before actual supply losses occur. Tanker owners are already assessing higher war-risk insurance premiums, revised voyage planning and additional security requirements before accepting cargoes destined for or departing the Gulf region.
Refined fuel markets have also tightened considerably, with diesel, aviation fuel and petrol prices strengthening as traders anticipate rising freight costs and possible delays to shipments originating from the Middle East. Analysts warned that any sustained slowdown in tanker movements through Hormuz could tighten global fuel supplies well before crude inventories begin to decline.
The renewed escalation has also cast fresh uncertainty over the interim U.S.-Iran understanding reached last month to facilitate navigation through the Strait of Hormuz. With both sides now exchanging fresh military actions and Washington hardening its position, market participants expect geopolitical developments to remain the dominant driver of crude prices in the days ahead.
For oil-producing countries such as Nigeria, stronger crude prices could translate into improved export earnings and higher government revenues. However, the upside may be offset by rising import costs for refined petroleum products, higher freight and insurance expenses, and renewed pressure on domestic fuel prices should tensions around the Strait of Hormuz continue to intensify.