Oil prices rose above $100 per barrel on Monday as the deadline passed for the start of a US blockade of maritime traffic around Iran's ports.
West Texas Intermediate crude oil was up 5.9% at $102.27 per barrel, having traded as high as $105.62 earlier in the session. Brent crude jumped 6% to $100.95 per barrel, after rising to $103.87 earlier in the day.
The blockade of maritime traffic entering and exiting Iranian ports was set to start at 10 am ET on Monday, according to a statement issued by the US Central Command, or CENTCOM, on Sunday.
"The blockade will be enforced impartially against vessels of all nations entering or departing Iranian ports and coastal areas, including all Iranian ports on the Arabian Gulf and Gulf of Oman," the statement said. "CENTCOM forces will not impede freedom of navigation for vessels transiting the Strait of Hormuz to and from non-Iranian ports."
Iran's Islamic Revolutionary Guard Corps has vowed to retaliate, CNN reported Monday.
In a social media post on Sunday, President Donald Trump said that the US navy will block "any and all ships trying to enter, or leave, the Strait of Hormuz," the world's most important chokepoint for crude flows.
"Once again, high stakes negotiations between the US and Iran deadlocked over Washington's zero uranium enrichment demand, setting the stage for further escalation in the (six)-week war and prolonged supply disruptions in advance of summer driving season," Helima Croft, head of global commodity strategy and Middle East and North Africa research at RBC Capital Markets, said in a report e-mailed toon Monday.
Trump is mulling over limited strikes against Iran following the failed peace negotiations, The Wall Street Journal reported, citing people familiar with the situation.
Besides uranium enrichment, Iran's control of the Strait of Hormuz was among the sticky issues between the two sides, Tudor Pickering Holt said in a note, citing media reports.
"The US appears to have rejected Iran's sovereignty claim to Hormuz (including toll collection) while Iran views the Strait's reopening as contingent on a final deal," Tudor Pickering Holt analyst Matt Portillo said in the note sent to.