Oil prices jumped sharply on Monday. Stock markets fell. This happened after peace talks between the US and Iran failed.
Then, former US President Donald Trump announced a blockade of the Strait of Hormuz.
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The Strait of Hormuz is a very important waterway in the Middle East. About one fifth of the world’s oil and gas passes through it.
The US and Iran held talks in Islamabad over the weekend. But the talks broke down. The US accused Iran of refusing to give up its nuclear program. Iran accused the US of changing its demands and using threats.
This news crushed hopes for ending a six-week conflict. The conflict had already pushed oil prices very high. It also increased inflation and hurt the global economy.
On Monday, oil prices jumped about eight percent. Both main types of oil went above $100 per barrel.
Stock markets in Asia also fell. Tokyo, Hong Kong, and Seoul all dropped at least one percent. Shanghai, Sydney, and other markets also went down.
Trump announced on social media that the US Navy would start blockading all ships trying to enter or leave the Strait of Hormuz. He warned that any Iranian who fires at US ships or peaceful vessels will be “blown to hell.”
The US military said the blockade would start Monday. It will only apply to ships going to or from Iranian ports.
Iran’s Revolutionary Guards said they still have full control over the strait. They warned that any wrong move by enemies would trap them in a “deadly trap.” Iran’s navy chief called Trump’s threat “ridiculous and funny.”
Experts warn that a US blockade is a very serious action. It could be seen as restarting the war between the two countries.
The ongoing Middle East crisis has made investors fear higher inflation. They also expect interest rates to stay high. Recent data shows US inflation rose to 3.3 percent in March, the highest level since last May.