Quick overview

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President Donald Trump ordered a blockade of the Strait of Hormuz following the collapse of peace talks over the weekend, escalating tensions with Iran and driving up oil prices while stocks and bonds fell.

Concerns that a blockade would interfere with energy flows through the vital waterway caused Brent crude to rise 7.4 percent to slightly over $102 per barrel.

Asian shares fell 1%, and the S&P 500 Index futures fell 0.8% as rising oil prices threatened to impede economic growth. Tech firms like MediaTek Inc. in Taiwan demonstrated tenacity, bolstered by strong sales. European stocks were expected to fall 1.5% At the opening.

The dollar has been the preferred haven since the start of the Middle East conflict, and it has strengthened against all of its Group of 10 counterparts. Concerns about rising energy prices driving up inflation caused Treasury bonds to decline and Japan’s 10-year yield to rise to 2.49 percent, the highest since 1997.

Trump’s threats of escalation damaged sentiment following global stocks’ largest weekly gain in over two years and Brent’s steepest week.

The US Central Command announced that it will start enforcing a blockade of all maritime traffic entering and departing Iranian ports on Monday at 10 am New York time in response to Trump’s declaration.

Vessels crossing the Strait of Hormuz to and from non-Iranian ports won’t have their freedom of navigation restricted by US forces. Iran declared that it “won’t allow” the blockade to continue. According to Trump, the US will clear mines in the strait and impose an interdiction on any ship that has paid a toll to Iran for safe passage through Hormuz.

A blockade would stop Iranian oil from flowing through the waterway at a rate of almost two million barrels per day, further restricting global supply and severing a crucial lifeline for the Islamic Republic of Iran.