Gotrade News - Iran shut down the Strait of Hormuz on Saturday and opened fire on at least two commercial vessels, sending WTI crude oil surging 7.55% to $90.18 per barrel. The closure came just two days after the strait had fully reopened on April 17 following the April 8 ceasefire.
Approximately 20 million barrels of oil pass through the Strait of Hormuz daily, representing roughly 20% of global petroleum demand. Iran's Parliament Speaker Mohammad Bagher Ghalibaf cited the ongoing U.S. naval blockade as justification for the closure, according to Benzinga.
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Key Takeaways:
- WTI crude surged 7.55% to $90.18/barrel after Iran closed the Strait of Hormuz and fired on commercial vessels
- Wall Street futures fell sharply: Dow -0.92%, S&P 500 -0.72%, Nasdaq -0.68%, reflecting renewed geopolitical risk
- The Fed is 99.5% likely to hold rates at next week's FOMC meeting as energy-driven inflation pressures mount
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U.S. Central Command responded by seizing the Iranian-flagged vessel TOUSKA en route to Bandar Abbas on Sunday. President Trump called the incident a "total violation" of the ceasefire and threatened to strike Iranian infrastructure if negotiations fail, as reported by Barchart.
Iran refused to participate in scheduled talks in Islamabad, according to state news agency IRNA. The U.S. administration is still planning a second round of negotiations for Tuesday with Vice President Vance, envoy Witkoff, and Jared Kushner leading the delegation.
Energy Markets and Wall Street Under Pressure
Brent crude also jumped to $96 per barrel, up 6.22%, while RBOB gasoline rose 4.13% to $3.13 per gallon. Since the conflict began on February 28, regular gasoline prices in the U.S. have climbed $1.16 to $4.14 per gallon, according to Motley Fool.
Energy stocks like Exxon Mobil (XOM) and Chevron (CVX) stand to benefit from the oil price spike. Airline stocks that rallied last Friday on lower fuel costs are likely to reverse those gains as crude surges again.
S&P 500 futures dropped 51.50 points to 7,110, while Dow futures fell 455 points to 49,186 in Monday pre-market trading. The 10-year Treasury yield rose 2 basis points to 4.27%, according to Benzinga.
Inflation Risks and Fed Policy Outlook
The trailing twelve-month inflation forecast for April climbed to 3.58%, well above the Fed's 2% target. This represents a 118 basis-point jump in just two months from 2.4% in February, as reported by Motley Fool.
Fed Governor Christopher Waller expressed caution about near-term rate cuts due to the energy shock. San Francisco Fed President Mary Daly shifted to a "wait-and-see" stance after previously anticipating one to two cuts this year, according to Barchart.
Markets now price a 99.5% probability of the Fed holding rates steady at next week's FOMC meeting. Rate cut probability through June 17 sits at just 4.11%, while rate hike probability has risen to 12.84%.
Investors tracking the energy sector may want to watch stocks like ConocoPhillips (COP) and the United States Oil Fund (USO). The Strait of Hormuz situation will be a key driver for oil prices and global market sentiment this week.
Sources: Benzinga, Motley Fool, Barchart
