Oil prices rose and stocks fell on Sunday evening after peace talks between the United States and Iran ended without a deal. Hours later, President Trump announced plans to blockade the Strait of Hormuz.
It is not yet clear what that escalation will mean for the fragile cease-fire the countries agreed to last week, leaving no clear path to ending a war that is now entering its seventh week. That uncertainty continues to rattle investors who are eager for a path to stabilizing the flow of oil and natural gas from the Persian Gulf.
In attempting a blockade, Mr. Trump is repeating a playbook he used recently against Venezuela to cut that country off from a vital source of revenue. This time, he does not want Iran to be able to use the strait, a vital waterway, for exports.
“We’re not going to let Iran make money by selling oil to people that they like,” Mr. Trump told Fox News.
Oil rises sharply
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Oil prices surged above $100 once more as markets opened on Sunday evening.
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The price of Brent crude, the global benchmark for oil, rose more than 7 percent to around $102 a barrel.
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West Texas Intermediate crude, the U.S. benchmark, climbed more than 8 percent to about $105 a barrel.
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Investors and analysts are focused on the continued disruption to shipping in the Strait of Hormuz, the narrow waterway between Iran and Oman that is a vital trading route for oil and natural gas. As much as one-fifth of the world’s oil supply and substantial amounts of natural gas typically pass through the strait. But few vessels have attempted that trip since the war started out of fear that Iran might attack.
Stocks tread water
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Futures on the S&P 500, which give investors a chance to bet on the market before exchanges open on Monday morning, fell roughly 1 percent. The stock market had stabilized after a fragile cease-fire took hold last week, with the S&P 500 rising 3.6 percent for the week through Friday, its second consecutive week of gains.
Gasoline prices remain elevated
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Gas prices were little changed on Sunday, at a national average of about $4.13 a gallon, according to the AAA motor club. The rise in prices since the war began has raised the cost of regular gas for drivers by 38 percent.
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Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.
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Diesel prices have increased more quickly in recent weeks and stood at $5.66 on Sunday, up some 50 percent since the start of the war.
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