Oil jumps and Asian markets slide as US readies for Strait of Hormuz blockade

Oil prices resumed their climb and Asian markets mostly declined on Monday as the US military prepared to blockade ships entering or leaving the Strait of Hormuz, where most shipping has been stalled by Iran since the start of the war.

Oil prices have been rising as shipping through the strait has essentially stalled since late February. Brent crude oil, the international standard, has gone from roughly $70 per barrel before the war in late February to more than $119 at times.

On Monday, benchmark US crude jumped 8.7 per cent to $104.95 a barrel. Brent crude, the international standard, rose $7.00, or 7.4 per cent, to $102.23 a barrel.

US president Donald Trump announced the planned blockade after US-Iran ceasefire talks in Pakistan ended without an agreement, and the Us military said the blockade involving all Iranian ports would begin Monday at 5.30 pm in Iran.

Japan’s benchmark Nikkei 225 lost 1.0 per cent in morning trading to 56,357.40. Australia’s S&P/ASX 200 shed 0.5 per cent to 8,913.50.

South Korea’s Kospi dipped 1.1 per cent to 5,795.15. Hong Kong’s Hang Seng slipped nearly 1.5 per cent to 25,513.42, while the Shanghai Composite fell 0.2 per cent to 3,976.57.

Analysts said global trading was expected to remain turbulent for some time.

“The outcome of the talks was not really what people were hoping for, that’s for certain,” Neil Newman, Managing Director, Head of Strategy at Astris Advisory Japan, said in Hong Kong. “As we stand here at the moment, it doesn’t look very nice. Certainly, the oil prices are a big concern.”

Wall Street ended last week with a second weekly gain in a row. The S&P 500 inched 0.1 per cent lower on Friday after a day of choppy trading. The Dow Jones Industrial Average fell 0.6 per cent and the Nasdaq composite rose 0.4 per cent. But those gains came amid optimism over the weekend peace talks in Pakistan that was shattered by the later developments.

The yield on the 10-year Treasury climbed to 4.32 per cent last Friday from 4.29 per cent late Thursday.

All told, the S&P 500 fell 7.77 points to 6,816.89. The Dow dropped 269.23 points to 47,916.57, and the Nasdaq gained 80.48 points to close at 22,902.89.

In currency trading, the U.S. dollar gained to 159.74 Japanese yen from 159.25 yen. The euro cost $1.1687, down from $1.1729.