Brent surges to $85 as Iran blockade revives Hormuz supply risks
Brent crude jumped to $85 a barrel after Washington reinstated a blockade on Iranian oil exports, shattering expectations of a quick diplomatic resolution and threatening higher shipping costs across global energy markets.
Brent crude rose 2.24 percent to $85.17 a barrel on Tuesday, while West Texas Intermediate gained 2.46 percent to $80.06. The benchmarks are now up 12 percent since Friday, extending an eight percent surge from Monday. The rally was triggered by US President Donald Trump’s announcement that Washington would reinstate its blockade of Iranian oil exports.
The price jump forces a reassessment of a June memorandum of understanding between Washington and Tehran. Traders had previously priced in a swift normalisation of shipping through the Strait of Hormuz following that diplomatic pact. Instead, markets are now bracing for prolonged disruptions to a waterway that handles nearly one-fifth of global oil consumption and a significant share of liquefied natural gas exports.
Compounding the supply risk is a separate proposal from Trump to impose a 20 percent fee on vessels transiting the strait, with the US acting as its "Guardian." Trump said the charge would cover "any and all costs necessary to do the job of providing safety and security to this very volatile section of the world."
Commodity strategists Warren Patterson and Ewa Manthey at ING noted the lack of clarity surrounding the levy. "There are few details on how this would work, or how serious Trump is about it," they said. ING calculated that a 20 percent charge on a two-million-barrel supertanker priced at $80 per barrel would amount to roughly $32 million, or an additional $16 per barrel in transportation costs.
That potential tariff dwarfs the $1 per barrel transit fee previously advocated by Iran. For global energy markets, the combination of a physical export blockade and an opaque, massive toll structure translates directly into heightened pricing volatility and disrupted trade flows.
The turbulence carries divergent implications for emerging economies. Oil-exporting nations such as Nigeria are seeing immediate support for government revenues, export earnings, and foreign exchange inflows. Conversely, net importing economies face the prospect of sustained increases in fuel prices.
Analysts expect oil prices to remain highly sensitive to Gulf shipping traffic and further policy announcements from Washington or Tehran in the coming days. Any additional disruption to regional crude exports could push Brent further above the $85 mark.
