Donald Trump Does Not Relax the Iranian Blockade, Oil Prices Reach 126 US Dollars

Brent, the global benchmark for oil prices, jumped 6.9 percent to $126.20 a barrel by 1219 Singapore time, after rising more than 6 percent the previous day. (PHOTO: EPA - The Straits Times)

JAKARTA - Oil prices jumped to new levels on April 30. The market reacted after reports emerged that the US military would brief President Donald Trump on possible actions against Iran.

As reported by The Straits Times citing Bloomberg, Thursday, April 30, Brent, the global oil benchmark, rose 6.9 percent to 126.20 US dollars per barrel at 12.19 Singapore time. The day before, Brent had jumped more than 6 percent to its highest level since June 2022.

West Texas Intermediate (WTI) crude, the U.S. benchmark, rose 3.1 percent to $110.23 a barrel.

Trump previously told Axios that he would not lift the naval blockade against Iran before a nuclear deal. Axios also reported that US Central Command would brief Trump on April 30 on possible military plans.

US pressure on Tehran is also widening. Washington is seeking the seizure of two Iranian-related oil tankers that were previously detained by the blockade naval forces. The US military is also said to have requested the delivery of hypersonic missiles to the Middle East.

The Strait of Hormuz has been effectively closed since the war began in late February. The route has long been the lifeline for the shipment of crude oil, natural gas, and oil products. When the line is disrupted, energy prices also soar.

On April 28, Trump discussed steps to extend the blockade in a meeting with oil and trade executives. The White House said the discussion also included ways to reduce its impact on US consumers.

Iranian officials have not remained silent. Mohsen Rezaee, military adviser to the Supreme Leader of Iran, stated that his country would respond if the US blockade continued. The Speaker of the Iranian Parliament Mohammad Bagher Ghalibaf accused Trump of wanting to force Tehran to surrender through economic pressure and internal divisions.

Robert Rennie, head of commodity research at Westpac Banking, said markets were losing hope that the war would end soon.

"Traders are now forced to face a much worse reality: both sides still feel they are winning, no party has a clear incentive to negotiate, and energy prices are starting to go higher," he said as quoted by The Straits Times.

The US and Iranian blockade of the Strait of Hormuz has cut daily traffic to near zero. The International Energy Agency calls this Middle East conflict the largest supply shock in history. Vitol Group estimates that the market is facing a loss of supply of around one billion barrels.

The US has turned away dozens of vessels since the blockade began on April 13. Seizing oil cargo on tankers linked to Iran would be an escalation of Trump's economic attacks. The move is also in line with Washington's strategy on Venezuelan crude oil after the overthrow of President Nicolás Maduro.

The Trump administration also asked other countries to join an international coalition so that ships could cross the Strait of Hormuz, according to a report by The Wall Street Journal citing internal cables from the US State Department on April 28.

Amid supply disruptions from the Middle East, U.S. crude exports surged to a record high. Overseas shipments rose above six million barrels per day, surpassing the previous record of nearly 5.3 million barrels per day at the end of 2023.

Rebecca Babin, senior energy trader at CIBC Private Wealth Group, called the April 29 price spike a "reckoning day".

"The paper market is starting to follow the physical market, which has begun to reflect a tighter balance and a delay in the flow of supplies," he said.