Oil prices surge over 8% as Hormuz blockade rattles markets

US equity futures slid and oil surged over 8 percent after President Trump announced a naval blockade of the Strait of Hormuz, following the collapse of peace talks with Iran and shattering hopes of a de-escalation in the region.

"Effective immediately, the United States Navy... will begin the process of BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz," Trump said on Truth Social, adding that other countries would be involved.

The flight to safety was immediate, with Dow Jones Industrial Average futures falling 411 points, or 0.9 percent. West Texas Intermediate crude jumped 7.9% to $104.17 a barrel, while global benchmark Brent gained 8.4% to $103.24, reflecting the strait's critical role in global energy supply.

The breakdown in negotiations reignites fears of a prolonged conflict that could keep energy prices elevated, further straining a global economy and setting a tense backdrop for the start of first-quarter earnings season.

Talks Collapse, Triggering Blockade

The announcement came after weekend negotiations in Islamabad, led by Vice President JD Vance, ended without an agreement. According to officials, the talks broke down over Iran's insistence on pursuing nuclear weapons, alongside demands for control of the Strait of Hormuz and war reparations. U.S. Central Command stated it would begin blocking maritime traffic to and from Iranian ports at 10 a.m. ET Monday, while allowing passage for vessels headed to other destinations.

Market Reverses Gains

The sharp reversal in sentiment erases optimism from the previous week, when a temporary ceasefire had fueled the best weekly gains for all three major benchmarks since November. The S&P 500 had rallied 3.6 percent on hopes for a swift end to the conflict. The new uncertainty now overshadows the unofficial start of the Q1 earnings season, with major banks including Goldman Sachs and JPMorgan Chase set to report.

This article is for informational purposes only and does not constitute investment advice.