Deadline passes for US blockade of Iran's ports, Tehran threatens to retaliate 

The deadline passed on Monday for the start of a US military blockade of ships leaving Iran's ports, and Tehran threatened to retaliate after weekend talks on ending the war broke down.

Oil prices climbed over $100 per barrel, with no sign of a swift reopening of the Strait of Hormuz to ease the biggest ever disruption in supplies and broader concerns over the durability of a two-week ceasefire agreement reached last week.

Since the war started on February 28, Iran has effectively shut the strait to all vessels except its own, saying passage would be permitted only under Iranian control and subject to a fee.

US President Donald Trump said Washington would block Iranian vessels and any ships that paid such tolls and that any Iranian "fast-attack" ships that went near the blockade would be eliminated. US Central Command said the measure would take effect from 10 am ET (1400 GMT) on Monday.

Brigadier General Reza Talaei-Nik, a spokesperson for Iran’s Ministry of Defence, warned that efforts by foreign military to police the strait would escalate the crisis and instability in global energy security.

NATO allies including Britain and France said they would not be drawn into the conflict by taking part in the blockade, stressing instead the need to reopen the waterway, through which about one-fifth of the world's oil normally passes.

The ceasefire that halted six weeks of US and Israeli airstrikes looked in jeopardy, with only a week left to run. Washington said Tehran rejected its demands at weekend talks in Islamabad, the highest-level discussions since Iran's 1979 Islamic Revolution.

BLOCKADE OF IRANIAN PORTS

The US military's regional Central Command said the blockade would be "enforced impartially against vessels of all nations" entering or leaving Iranian ports in the Gulf and the Gulf of Oman.

"The blockade will not impede neutral transit passage through the Strait of Hormuz to or from non-Iranian destinations," Central Command said in a note to seafarers seen by Reuters on Monday.

Two Iranian-linked tankers, the Aurora and New Future, laden with oil products, left the strait on Monday before the deadline, according to LSEG data.

An Iranian military spokesperson called any US restrictions on international shipping "piracy," warning that if Iranian ports were threatened, it would retaliate. Any military vessels approaching the strait would violate the ceasefire, Iran's Revolutionary Guards said.

Trump said that Iran's navy had been "completely obliterated" during the war, adding that only a small number of "fast-attack ships" remained.

Pakistani Prime Minister Shehbaz Sharif said efforts were still on to resolve the conflict after the direct talks between the U.S. and Iran in Islamabad at the weekend.

Trump has declared victory, despite failing to achieve the objectives he set out at the start of the war: to eliminate Iran's ability to strike its neighbours, end its nuclear programme and make it easier for Iranians to topple their government.

OIL BENCHMARKS UNDERSTATE DISRUPTION

Benchmark oil prices, which had eased last week after the ceasefire was announced, traded around 5 per cent higher on Monday, off the day's highs but still above $100 a barrel.

Traders say the main benchmarks - used to set prices for trillions of dollars' worth of commodities worldwide - actually understate the severity of a disruption with no precedent in modern times.

Trump has long said a bump in US gasoline prices would be short-lived. But he told Fox News' "Sunday Briefing" that they could stay high through November's midterm elections.

Iran's chief negotiator, Mohammad Baqer Qalibaf, posted a map of Washington-area gasoline prices on social media with the comment: "Enjoy the current pump figures. With the so-called 'blockade'. Soon you'll be nostalgic for $4–$5 gas."