Trump insists on a "lockdown," Brent oil rises for eight consecutive sessions to stand at $120, Iranian parliament speaker mocks: "Next step $140."

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The Strait of Hormuz deadlock is pushing the oil market from a short-term shock to a lasting repricing. Trump insists on imposing a maritime “blockade” on Iran, Brent crude oil rises for the eighth consecutive day and stands above $120, energy shortages, inflation expectations, and bond market sell-offs are heating up simultaneously.

According to Xinhua News Agency, Trump stated on the 29th that he will continue to enforce the maritime blockade on Iran until Iran agrees to a deal that assuages US concerns about Iran’s nuclear program. He said that the blockade is “in some ways more effective than bombing,” that Iran’s situation “will only get worse,” and that he does not intend to lift the blockade.

Brent crude oil surged nearly 10% on Wednesday to $122.15 per barrel, the highest level since 2022, and recorded its eighth consecutive trading day of gains, setting the longest winning streak in nearly four years. US WTI crude rose 7% to $106.88 per barrel. Traders’ optimism that a three-week ceasefire could restore Gulf energy flows is fading.

Iranian Speaker MB Ghalibaf responded on social platform X, “Three days have passed, there hasn’t been an oil well explosion. We can extend it to 30 days, and broadcast the oil wells live here.” He also stated that those pushing the “blockade theory” have driven oil prices above $120. “Next step: $140.”

Bloomberg energy and commodities columnist Javier Blas wrote that the market once expected to see “TACO,” i.e., “Trump Always Chickens Out,” but what we have now is “NACHO,” i.e., “Not A Chance Hormuz Opens.” Such statements reflect that market expectations for a short-term reopening of the Strait of Hormuz are further declining.

“Blockade” Becomes Core Bargaining Chip in Negotiations

Before the conflict, the Strait of Hormuz carried about one-fifth of the world’s oil flow. Due to Iranian attack threats and the US maritime blockade, shipping through the strait remains nearly at a standstill.

According to Xinhua News Agency, Trump’s latest statement means he has rejected the new negotiation proposal put forward by Iran. This proposal, transferred to the US side via Pakistan, suggests advancing negotiations in three stages: the first stage to end the war, the second focusing on reopening the Strait of Hormuz, and the third involving the Iran nuclear issue. US officials told the media that Trump is dissatisfied with the proposal because the first two stages don’t involve the Iranian nuclear issue.

The report said Trump still views a sustained blockade as his main bargaining chip. If Iran remains unyielding, he will consider military action. Three sources revealed that the US Central Command has formulated a plan for a "swift and fierce" strike against Iran, but Trump declined to disclose specific military plans in the interview.

Iran, on the other hand, released strong signals. Iran’s Press TV, citing an unnamed senior security official on the 29th, said that if the US continues to impose a maritime blockade on Iran in the Strait of Hormuz, Iran will respond with “practical and unprecedented military actions” to the US’s “continued acts of piracy.”

Oil Prices Pricing In “Long-Term Stalemate”

Oil prices accelerated their rise on Wednesday, mainly because the market started to reassess the blockade’s duration. Previously, traders were still betting that the strait might suddenly reopen, an expectation that suppressed further oil price increases. After Trump’s latest statement, the market began to price in a blockade risk lasting ‘months rather than days or weeks’.

Hamad Hussain from Capital Economics stated that the possibility of a sudden reopening of the Strait of Hormuz has been a key factor restraining further oil price rises. But the market is now responding to a stronger expectation that the US blockade of Hormuz may last for months.

Saxo Bank’s Head of Commodity Strategy Ole Hansen said, “As long as there is no sign of an end, oil prices will rise a few dollars every day.” He said the market is tightening and prices need to reflect that. Mizuho Securities USA’s head of energy futures, Robert Yawger, also told Bloomberg that unless there is a solution to end the deadlock or at least reopen the Strait of Hormuz, the market will continue to climb.

Michelle Brouhard, Kpler Ltd.'s head of policy and geopolitical risk, told Bloomberg TV that the deadlock could last for several weeks. She believes that, ultimately either the global market will send a signal to Trump that the oil shortage is unbearable, or Iran will express a desire to resume oil exports.

Inflation and Bond Markets Simultaneously Under Pressure

Oil price increases have already spread to the bond market. The oil surge triggered a sell-off in long-term US treasuries, with the 30-year US Treasury yield hitting 5% for the first time since last summer. Traders are betting that the US economy may face more protracted inflationary pressures.

The Fed kept rates unchanged on Wednesday. The Fed said the Gulf oil supply crisis caused by the war is “heightening the uncertainty of the economic outlook.” Some voting members disagreed with sending a future rate-lowering signal in the policy statement, showing that the shadow of war has already affected rate discussions.

Fuel prices are also rising. Data from the American Automobile Association (AAA) show that US gasoline prices rose to $4.23 a gallon on Wednesday, the highest level since the US-Israel-Iran war broke out. For major economies, higher energy costs mean inflation pressures may rise again.

UAE Exit from OPEC Fails to Ease Supply Anxiety

There is also new uncertainty on the supply side, though the market has chosen to ignore it for now. The UAE decided to quit OPEC on Tuesday, but traders have not reduced their bets on rising oil prices because of it.

Since the conflict began, UAE’s output has been far below its OPEC quota, as its export capacity has been severely restricted due to Iran’s threat to Hormuz Strait shipping. Therefore, even if the UAE could increase output, as long as the Strait is not reopened, new supply can hardly enter the global market effectively.

Nadège Dufossé, Global Multi-Assets Head at Candriam, said the initial geopolitical shock is entering a more lasting stage. For investors, the key variable has shifted from day-to-day oil price gains to the length of the blockade, inflation repricing, and whether central banks are forced to reassess their rate paths.

Risk Disclosure and DisclaimerThe market comes with risks, and investments need to be cautious. This article does not constitute personal investment advice, nor does it consider the special investment objectives, financial status, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article fit their own situation. Investment based on this is at your own risk. ```