US Central Command has said that they will begin blocking ships entering and exiting the Strait of Hormuz from Monday 10 AM Eastern Time, but ships headed to non-Iranian ports will not be blocked.
Along with crude, futures of European Gas have also surged as much as 18% in early trading.
The Strait of Hormuz, which carries nearly 20% of the global energy supply, most of it to Emerging Markets, has been virtually shut since the US-Iran war began at the end of February. Reports have also emerged of Iran imposing payments for some vessels, although some have crossed the strait in co-ordination with the Iranian forces.Mona Yacoubian, director of the Middle East Program at the Center for Strategic and International Studies, said it is hard to make sense of the US plan. She went on to add that if Iran feels that its oil exports are being threatened, it may push Houthi forces in Yemen to target transit through a chokepoint at Bab el-Mandeb, at the southern entrance to the Red Sea.
Two vessels attempting to transit the passage made an abrupt U-turn on Sunday after talks broke down in Islamabad.
Saudi Arabia said separately on Sunday that it had restored full pumping capacity through the East-West pipeline, a vital cross-country link to the Red Sea, and output from the Manifa field.
(With Inputs From Agencies)
