International oil prices surge sharply due to breakdown in US-Iran negotiations... Strait of Hormuz blockade intensifies

International oil prices rose on the 27th due to the failure of the second ceasefire negotiations between the United States and Iran, and the ongoing control status of the Strait of Hormuz. The Middle East military conflict has failed to find a diplomatic solution, and the Strait, a critical channel for global oil transportation, is effectively blocked, once again causing serious market concerns over supply disruptions.

On that day, Brent crude for June delivery closed at $108.23 per barrel on the London International Futures Exchange, up 2.8% from the previous trading day. West Texas Intermediate (WTI) for June delivery closed at $96.37 per barrel on the New York Mercantile Exchange, up 2.1%. Brent crude temporarily approached $110 per barrel during trading, reaching the highest level in about three weeks since April 7. The reason for such volatile fluctuations in international oil prices is that the price structure of the crude oil market not only reflects actual production but also future transportation possibilities.

The direct cause intensifying market uncertainty is the breakdown of the second ceasefire negotiations between the U.S. and Iran. The negotiations scheduled last weekend in Islamabad, Pakistan, failed to materialize, leading President Donald Trump to cancel the Pakistani trip of the negotiation team and pressure Iran to initiate contact if willing. As the ceasefire talks have entered a standoff, investors believe that short-term tensions are unlikely to ease.

The situation in the Strait of Hormuz has further amplified these concerns. Iran immediately imposed control over the strait after the outbreak of war on February 28, and the U.S. also began blocking the strait on April 13. Iran briefly reopened the strait from April 17 to 18 but then reimposed restrictions, currently maintaining limited navigation, effectively in a state of blockade. According to ship tracking firm Kpler and satellite analysis company Synmax, at least 7 ships passed through the strait the previous day. Considering that about 140 ships pass daily before the conflict, maritime logistics capacity has been significantly reduced. The Strait of Hormuz is a key route for Middle Eastern oil producers’ crude oil and liquefied natural gas entering global markets. Once this route is obstructed, supply anxiety will immediately transmit to international energy prices.

Industry concerns are that this situation is not merely psychological panic but could develop into actual supply and demand imbalance. Analyst Thamas Varga of oil brokerage PVM pointed out that 10 to 13 million barrels of oil per day are unable to supply the global market, further exacerbating supply-demand imbalance. Ultimately, the direction of oil prices depends on the situation in the Middle East and whether the strait controls are relaxed. This trend indicates that if future negotiations are delayed or the blockade becomes prolonged, international oil prices will face further upward pressure.