Global oil prices hit a four-year high as U.S; President Donald Trump signaled the U.S. would maintain a naval blockade of Iranian ports for months if necessary, according to a White House official. The blockade. Aimed at forcing Iran to curtail oil production, has caused Brent crude to surge past $126 a barrel — the highest level since Russia’s invasion of Ukraine in 2022. The standoff has led to a near-total shutdown of oil shipments through the strategic Strait of Hormuz, a critical artery for global energy supplies.

Oil Markets React to Prolonged Blockade

The International Energy Agency (IEA) warned that the situation represents the “greatest threat to energy security in history,” with daily oil exports through the strait falling from an average of 20 million barrels a day to just 13 million since the conflict began. According to IEA Executive Director Fatih Birol, the loss of supply has triggered “significant supply shortages” of critical fuels, particularly affecting European aviation fuel supplies, and Birol noted that Europe imports 75% of its aviation fuel from refineries in the Middle East — a supply line now effectively cut off.

Meanwhile, U.S. gas prices hit $4.23 a gallon, the highest in nearly four years, as traders anticipate a prolonged disruption. Energy analysts have expressed growing concern that diplomatic efforts to reopen the strait have failed, with Trump reportedly rejecting Iran’s latest proposal for a reopening. “The breakdown of talks has the market losing hope for any quick resumption in oil flows,” said Warren Patterson, head of commodities strategy at ING.

Tensions Spill into Diplomacy and Trade

Trump’s hardline stance has also extended beyond military strategy. In a sharp rebuke of Spain, Trump threatened to cut all trade ties with the country after Madrid refused to allow U.S. military flights through its bases. Speaking in the Oval Office alongside German Chancellor Friedrich Merz, Trump labeled Spain a “terrible” ally and instructed Treasury Secretary Scott Bessent to initiate the trade severance. The Spanish government responded that trade policy is managed at the EU level and emphasized Spain’s reliability as a NATO partner and major EU exporter.

Trump has not yet decided on a long-term strategy for the strait, but his national security team has presented several options, including increasing or decreasing the U.S. military presence and potentially adopting more aggressive operations in the region. During a meeting with energy executives, Trump reiterated that the blockade could continue for months and discussed ways to mitigate impacts on American consumers.

Global Economic Risks and Diplomatic Deadlock

Economists warn that a prolonged blockage could trigger a global recession driven by rising fuel and industrial costs. Nobel laureate Paul Krugman noted that most analysts have been “far too sanguine” about the potential economic fallout. The crisis has also affected Iran’s domestic economy, with the national rial hitting a record low against the U.S. dollar.

Diplomatic efforts remain deadlocked. Peace talks in Islamabad were canceled by Iran, and a subsequent attempt to resume negotiations also failed. Trump canceled a planned trip to Pakistan for U.S. envoy David J. Kupelian after the breakdown. The Iranian Foreign Minister is expected to return to Islamabad for further discussions, but no date has been set for new talks.