Global Oil Lifeline at Risk as US Begins Hormuz Blockade Following Deadlocked Talks

US President Donald Trump announced on Sunday that the US Navy will begin blockading the Strait of Hormuz with immediate effect following the failure of peace talks with Iran in Pakistan. In a post on the social media platform Truth Social, Trump accused Iran of ‘extortion’ and stated that the US Navy would also hunt down ships in the vital waterway that have paid a toll to transit through the Strait.

“So, there you have it. The meeting went well, most points were agreed to, but the only point that really mattered, NUCLEAR, was not,” Trump said in the post. “Effective immediately, the United States Navy, the Finest in the World, will begin the process of BLOCKADING any and all ships trying to enter or leave the Strait of Hormuz.”

Iran’s Islamic Revolutionary Guard Corps (IRGC) cautioned on Sunday that civilian vessels can cross the strait by complying with ‘specific regulations.’ However, it added that military vessels approaching the strait would be considered a breach of the ceasefire and would be ‘dealt with severely.’

Last week, Tehran agreed to open the Strait of Hormuz after the White House agreed to a two-week temporary ceasefire. However, Tehran demanded a toll ‘fee’ from vessels that need to transit. This fee shall be used for reconstruction and repair of the damaged infrastructure in the country during the conflict. Tehran also suggested alternate routes in the strait, as the regular pathway posed risks of sea mines.

The tripartite conflict between the US, Israel, and Iran began on February 28 and has paralysed the Strait of Hormuz after Tehran took sole control over it. The strait serves as a critical chokepoint through which nearly 25% of global energy trade passes. The war has also sent jitters across global markets, especially the oil market, with analysts warning that a prolonged war could risk triggering a global recession and economic slowdown.

Failed Negotiation

Pakistan served as a key negotiator in the peace talks between Washington and Tehran, with a temporary ceasefire reached last week. However, due to its fragile nature, the latest round of talks, which lasted for over 20 hours, failed to yield a resolution. Market participants are bracing for an escalation of the conflict amid heightened uncertainty.

“We just could not get to a situation where the Iranians were willing to accept our terms. I think that we were quite flexible,” US Vice President and key negotiator JD Vance said. He immediately left for the US but hinted that the US is still open to striking a deal based on its last proposal. “We’ll see if the Iranians accept it,” Vance said.