Oil prices rise nearly 6% as U.S. military blockade of Iranian ports takes effect

By Myra P. Saefong and Isabel Wang

Concerns over a slowdown in demand emerge in the wake of oil's latest rally

The U.S., whose delegation was led by Vice President J.D. Vance, and Iran were unable to reach a deal during 21 hours of discussions over the weekend. Oil prices are climbing.

Oil prices surged by nearly 6% in Monday dealings as the U.S. military began a blockade of Iranian ports following failed negotiations over the weekend between the U.S. and Iran.

Prices, however, were below the session's highs after the Organization of the Petroleum Exporting Countries lowered its demand growth forecast for the second quarter, citing developments in the Middle East.

"Sentiment's all about 'this too shall pass' vibes," Manish Raj, managing director at Velandera Energy Partners, told MarketWatch. "With the blockade kicking in, early bulls rode the fear wave, but macro hawks are whispering that Uncle Sam is just playing theatrics to negotiate with Iran."

Oil prices pared some of the gains in the wake of the blockade, which Raj referred to as more of a "bargaining chip in [President Donald] Trump's high-stakes poker game."

The pared gains "scream temporary tantrum, not permanent shock," Raj said.

West Texas Intermediate crude saw its May contract (CL.1) (CLK26) climb 6% to $104.23 a barrel after trading as high as $105.63, while Brent crude futures for June delivery (BRN00) (BRNM26) were up 5.7% to $100.62 a barrel, according to FactSet data.

Brent, the international benchmark, and WTI last week logged their biggest one-week percentage declines since April 2020. Brent finished at $95.20 a barrel and WTI closed at $96.57 a barrel after weekly losses of more than 12% each.

Still, overall gains in oil prices, with Brent up nearly 20% month to date, have sparked concerns over a slowdown in demand.

In a monthly report released Monday, OPEC lowered its demand growth forecast for the second quarter by 500,000 barrels, although it also said the weakness will likely be offset later in the year.

Trump announced in a post on Truth Social on Sunday that the U.S. would establish a blockade against all ships seeking to enter or exit the Strait of Hormuz, adding that the U.S. military would begin removing mines laid by Iran since the conflict began on Feb. 28.

Washington and Tehran were unable to agree during the 21-hour discussions over the weekend on demands for the Islamic Republic to dismantle its nuclear program. Iranian Parliament Speaker Mohammad-Bagher Ghalibaf said the U.S. delegation, led by Vice President J.D. Vance, did not gain the trust of the regime.

Trump said the U.S. military was "locked and loaded" and prepared at an "appropriate moment" to attack Iran.

See: Here's a look at the known damage to Gulf energy facilities as the U.S. and Iran meet for talks

The lack of certainty about when and whether the conflict will end has fueled negative sentiment among investors, who had hoped for a deal between the two countries, accompanied by a plan to reopen the strait. A reboot of talks could be on the horizon: The Wall Street Journal reported that "regional countries" are working to bring the U.S. and Iran back together.

For now, the U.S. stock market appeared to be shrugging off concerns about escalation. The S&P 500 SPX was up 0.1%, while the Dow Jones Industrial Average DJIA was down 0.5%. The Nasdaq composite tacked on 0.4%.

Nora Redmond contributed.

-Myra P. Saefong -Isabel Wang

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04-13-26 1153ET