Oil Surges Above $120 as US Blockade Squeezes Iran Exports

A US naval blockade of Iranian oil exports has pushed global oil prices above $120 per barrel, with average gasoline prices in the United States reaching a four-year high, as tensions escalate dangerously in the Strait of Hormuz. President Donald Trump has declared the blockade a success and rejected Tehran's proposal to reopen the strategic shipping chokepoint, signaling that the pressure campaign will remain in place until a broader nuclear agreement is reached. Iran has warned of "unprecedented action" if the blockade continues, with the country's military stating that its restraint thus far was intended to provide diplomatic space. Oil prices surged to their highest levels since mid-2022, with Brent crude climbing approximately 1.96% to around $120 per barrel and US West Texas Intermediate rising to $107.09, according to Goldman Sachs analysis. The bank estimates that exports through the Hormuz chokepoint have collapsed to just 4% of normal levels due to the blockade. Trump intensified his rhetoric on social media Wednesday, posting an AI-generated image of himself holding a weapon alongside the words "NO MORE MR. NICE GUY!" and warning that Iran "better get smart soon" because it "can't get their act together" on nuclear negotiations. Goldman Sachs analysts cautioned that while constrained Iranian exports could deepen supply disruptions if the blockade persists, there are emerging downside risks to demand, noting global oil consumption in April may be approximately 3.6 million barrels per day lower than February levels, with weakness concentrated in jet fuel and petrochemical feedstocks. The bank also noted that any boost to output from the UAE following its OPEC exit is likely to materialize more gradually over the medium term rather than offsetting near-term market tightness.