By Scott DiSavino
NEW YORK, April 13 (Reuters) – Oil prices climbed about 4% on Monday after the U.S. military began a blockade nL6N40V09S of ships leaving Iran’s ports and Tehran threatened to retaliate against ports of its Gulf neighbors, raising fears of more energy supply disruptions after weekend talks on ending the Iran war https://www.reuters.com/world/iran/ broke down.
Brent futures rose $4, or 4.2%, to $99.20 a barrel at 2:01 p.m. EDT (1801 GMT), while U.S. West Texas Intermediate (WTI) crude rose $2.53, or 2.6%, to $99.10.
Futures prices pared earlier gains on worries high prices could hurt economic growth and destroy energy demand, and after U.S. President Donald Trump https://www.reuters.com/world/us/donald-trump/ said on Monday that 34 ships had passed through the Strait of Hormuz on Sunday. The strait handles about 20% of global oil and liquefied natural gas flows.
Earlier in the trading session, Brent was up more than $8 a barrel and WTI was up more than $9.
Trump also said Iran wants to make a deal and that he will not come to any agreement that allows Tehran to have a nuclear weapon.
In the spot market, meanwhile, prices for physical crude for immediate delivery nL6N40W0KB to Europe were trading at record highs of around $150 a barrel.
“(If) Trump does indeed back his blockade threat with actual boats, a convergence between the paper and physical markets may soon come,” said Helima Croft, an analyst at RBC Capital Markets.
Trump warned that any Iranian “fast-attack” ships nL6N40W0W0 that go near a U.S. maritime blockade nL1N40W0DH on Iran would be eliminated.
NATO allies nL1N40W0J7, however, said they would not get involved in Trump’s blockade plan, proposing instead to intervene only once fighting ends.
HIGH PRICES CAN DESTROY ENERGY DEMAND
Alarm over the impact of the Iran war on the global economy grew with more countries announcing emergency support measures nL1N40W0K8 to combat rising energy costs, while others appealed for international support.
The Organization of the Petroleum Exporting Countries lowered its forecast https://www.reuters.com/business/energy/opec-lowers-second-quarter-global-oil-demand-forecast-iran-war-2026-04-13/ for world oil demand in the second quarter by 500,000 barrels per day.
The head of the International Energy Agency nL1N40W0TE, Fatih Birol, said he hopes another oil stockpile release is not needed but “we stand ready to act” if the energy shock resulting from the war with Iran requires it.
Saudi Arabia said crude oil sales to China nL1N40W081 are set to fall in May as the war drives up prices and disrupts shipping.
India nL1N40W0BS said it was likely to see below-average monsoon rains for the first time in three years in 2026, stoking concerns about farm output and growth in Asia’s third-largest economy as it battles inflation driven by the Middle East war.
Inflation is also a concern in Europe, where European Central Bank nL8N40W0XH Vice President Luis de Guindos said any ECB interest rate rise nL6N40W0LA will depend on how a war-fuelled surge in the cost of crude oil and some chemicals impacts other prices.
Central banks like the ECB use interest rates to control inflation. Higher rates boost consumer costs and can slow economic growth and demand for oil.
European Union nL8N40W0Q2 Commission President Ursula von der Leyen said member states must coordinate on energy prices amid a 22 billion euro ($25.70 billion) increase in fossil fuel bills since the start of the war.
In the U.S., existing home sales nL1N40W0MB fell to a nine-month low in March amid tight inventory and growing concerns over the labor market, and a recent increase in mortgage rates because of the war on Iran could limit activity this year.
Bank of Japan nL1N40W05N Governor Kazuo Ueda said uncertainty over the Middle East conflict was keeping markets unstable and could hurt factory output, signaling the central bank’s escalating alarm over the economic hit from the war.
(Additional reporting by Scott DiSavino in New York, Ahmad Ghaddar in London and Florence Tan and Jeslyn Lerh in Singapore; Editing by Kirsten Donovan, David Goodman, Paul Simao and Bill Berkrot)
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