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US Oil Update: Futures Surge as Trump Reinstates Iran Blockade, Mulls 20% Hormuz Toll

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Crude futures surged in midday trading on Monday after President Trump announced the reinstatement of a naval blockade on Iranian shipping and the imposition of a 20% toll on all cargo transiting the Strait of Hormuz.

Front-month West Texas Intermediate crude futures advanced 7.8% to $76.95 per barrel, while Brent futures climbed 7.8% to $81.94/bbl.

Soojin Kim, research analyst at MUFG, said crude prices climbed after the US launched another round of strikes against Iranian targets, intensifying concerns about Middle East oil supplies.

On Monday, Trump said the US would reimpose a naval blockade against Iran as Tehran and Washington battle to control the Hormuz, while demanding reimbursement equivalent to 20% of all cargo shipped.

Later in the day, the US Central Command said that the blockade would start at 4 p.m. Tuesday.

Gelber & Associates strategists said Trump's reinstatement of restrictions on Iranian maritime traffic, alongside retaliatory attacks and reduced vessel flows through the Strait, has intensified concerns over near-term supply availability.

The decision to reimpose the blockade added to bullish momentum after the US and Iran traded strikes over the weekend, including attacks on energy infrastructure, further straining a mid-June ceasefire that was expected to lead to a normalization of traffic through the Strait.

Iran's Islamic Revolutionary Guards Corps had earlier said that normal shipping through the strategic waterway could only resume if the US halted its military operations in the region, noting that continued American intervention risked broader disruption to global oil and gas markets.

The Persian Gulf Strait Authority, the Iranian authority overseeing navigation in the Hormuz, also said transit had been suspended following what it described as "illegal movements" by US military forces in the region.

The US military launched another wave of strikes Sunday against Iran after hitting 140 targets on Saturday, according to US Central Command. CENTCOM said the US carried out its first combat use of unmanned surface vessels to strike Iran's Bandar Abbas Naval Base.

Meanwhile, tanker traffic through the Strait of Hormuz fell significantly, with the latest data from MarineTraffic indicating that confirmed crossings dropped by about 52% over the week between July 10 and July 12.

Kim said that unless shipping through the Strait of Hormuz normalizes quickly, the market is likely to remain highly sensitive to any further attacks on energy infrastructure.

The US has played a central role in cushioning global oil markets amid ongoing supply disruptions, but its ability to continue offsetting losses is under pressure as domestic emergency stockpiles decline and risks in the Strait mount.

The US Department of Energy's latest data released Monday pegged Strategic Petroleum Reserve inventory levels at 316.5 million barrels as of July 10, down from 319.5 million barrels a week earlier.

Gibson strategists said that a prolonged closure or further escalation around Hormuz could leave the global oil system facing a far more difficult supply environment.

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Weekly Crude Prices Rally as Renewed US-Iran Escalation Fuels Strait of Hormuz Supply Risks

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Trump posted.Additionally, US officials are reportedly demanding that Iran issue a public statement declaring the Strait of Hormuz open to shipping and affirming that vessels may safely transit the waterway.Officials reportedly said internal struggles in Iran are hindering efforts to strike a deal, multiple media outlets reported on Friday.A failure by Iran to declare the Strait open to shipping will result in consequences, officials reportedly said.Despite the late-week pullback in prices, severe structural risks remain.The prevailing threat level to maritime security in the Strait of Hormuz remains "severe," the Joint Maritime Information Center said on Friday, following recent developments in the Middle East.While crude availability received a temporary reprieve, refined product markets for diesel and gasoline continue to flash tight supply conditions due to refinery strains and Russian fuel disruptions.Ukrainian President Volodymyr Zelenskyy posted on X on Friday that Russia's gasoline crisis is deepening.In a separate post on Friday, Zelenskyy said, "Ukrainian drones reached Siberia and struck the oil refinery in Omsk - nearly 2,500 kilometers from Ukraine. 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Oil & Energy

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