Oil prices jump above $103 a barrel as the US unveils a blockade against Iran

Oil prices have risen sharply following US President Donald Trump’s statement of a naval blockade of Iran. The international benchmark, Brent crude, rose more than 8 per cent on Sunday to top $103 a barrel.

Since Tuesday, it was the initial time the benchmark rose above the psychologically significant threshold of $100, when costs surpassed $111 a barrel.

On Sunday, Trump announced that the US Navy would block all ships from getting inside or present the Strait of Hormuz. It follows up on the collapse of ceasefire talks between the US and Iranian officials over the weekend.

In a later statement, US Central Command said that it would just block vessels travelling to and from Iran. The traffic would not be hindered, in a clear scaling back of Trump’s threat to impose a full blockade.

The command said the obstruction would take effect on Monday at 10am Eastern Time.

The prices of oil prices have been going up and down since Middle East tensions over Iran prompted Tehran to entail a de facto blockade of the Strait of Hormuz. It is a conduit for about one-fifth of global oil as well as natural gas supplies.

After peaking above $119 last month, Brent crude dropped below $92 a barrel last week following a two-week US-Iran ceasefire after more than six weeks of conflict.

However, Iran has permitted a limited number of ships to cross the waterway, subject to prior vetting and authorisation. The traffic has been reduced to a trickle compared with peacetime levels.

Despite Washington and Tehran fragile truce officially staying in place until April 22, just 17 vessels crossed the strait on Saturday.