Brent crude futures rocketed back to $114 per barrel after Iran's Islamic Revolutionary Guard Corps formally declared the Strait of Hormuz closed for a second time, reversing nearly all of the price relief that followed the April 8 ceasefire and confirming that the two-week truce has effectively unravelled.
From $108 to $114 in a Single Session
Front-month Brent futures, which had briefly topped $108 the previous session, gapped higher overnight and traded as high as $114.30 before settling near $113.80 — a daily gain of roughly 6%. West Texas Intermediate followed, closing above $103.
The move retraced the bulk of the 13% sell-off that followed the Pakistan-mediated ceasefire announcement on April 8 and pushed front-month volatility back toward the multi-decade highs registered in March.
IRGC Statement: "Cannot Be as Before"
The IRGC's naval command issued a televised statement declaring that "the Strait of Hormuz is closed to all hostile and non-coordinated traffic," echoing the language used by Iran's parliament speaker on March 17. Iran's Foreign Ministry separately said that no commercial vessel would be permitted to transit without prior clearance from the Iranian Maritime Authority and that escorts by foreign navies would be treated as a hostile act.
The announcement followed a series of incidents in the preceding 48 hours, including reports of fast-attack craft shadowing two VLCCs near Larak Island and the brief detention of a Marshall Islands-flagged tanker by IRGC personnel.
Why the Truce Failed
Negotiations between U.S. and Iranian envoys, hosted alternately in Islamabad and Muscat, broke down over three core issues. Iran rejected the U.S. demand for the dismantling — rather than capping — of its enrichment infrastructure. Washington refused Tehran's request for the unfreezing of an estimated $80 billion in central bank assets. And Israel, which had remained outside the framework, conducted limited reconnaissance flights over western Iran that Tehran cited as a violation of the ceasefire's spirit.
Iran's Supreme National Security Council convened a late-night session on April 26 and reportedly authorized the IRGC to "restore deterrence" in the Gulf, language widely interpreted as clearance for renewed pressure on shipping.
Market Damage Reaccumulates
The roughly two-week window of partial Strait of Hormuz access allowed approximately 40 million barrels of pent-up Gulf crude to reach loading ports, providing modest physical relief to Asian refiners. That window has now closed.
Tanker tracking data show at least 27 vessels reversed course in the Gulf of Oman within hours of the IRGC announcement, while a further 12 anchored in the Fujairah outer roads pending clarification. War-risk insurance premiums on Gulf transits, which had begun to ease toward 0.4% of hull value, snapped back above 1%.
Refiner Margins Spike Across Asia
Singapore complex margins for Dubai-equivalent crude jumped to over $24 per barrel, the highest since the March peak. Indian and South Korean refiners, which had partially restocked during the ceasefire window, are again drawing down strategic and commercial inventories at an accelerated pace.
Diesel cracks in Asia widened to over $40 per barrel, reflecting the reality that any sustained closure of Hormuz cuts not only crude flows but also the meaningful share of clean-product exports that originate from Saudi, Kuwaiti and UAE refineries.
OPEC+ Faces a Difficult Decision
The renewed closure puts OPEC+ in an awkward position ahead of its scheduled May meeting. The group had agreed in early April to add 206,000 barrels per day of supply for May, with much of that incremental volume sourced from Gulf producers whose export logistics are now compromised again.
Traders are increasingly focused on whether Saudi Arabia can sustain elevated Yanbu Red Sea exports — which had been scaled back during the ceasefire — and whether the UAE's ADNOC will accelerate eastbound flows from Fujairah, which sits outside the Strait. Both pipelines are running at or near capacity.
Strategic Reserve Optionality Diminishing
The U.S. Strategic Petroleum Reserve has fallen below 290 million barrels, its lowest absolute level since 1983. IEA member stockpiles have likewise been drawn down to roughly 88 days of net imports, modestly above the 90-day floor mandated by treaty.
Energy Secretary statements over the weekend signaled willingness to extend coordinated releases, but officials privately concede that another large drawdown would mortgage the U.S. ability to respond to a future shock.
Forecast Revisions Pile Up
Within hours of the IRGC announcement, Goldman Sachs raised its second-quarter Brent forecast back to a $105–$120 range. Morgan Stanley flagged $130 as the upside target if any kinetic incident occurs in the Strait, while RBC Capital Markets warned that a sustained closure beyond mid-May would justify $140 prints.
Forward curves moved sharply into backwardation, with the prompt-month-versus-six-month spread widening to nearly $9 — a signal that physical desks expect prompt tightness to persist regardless of headline diplomatic developments.
What Comes Next
The collapse of the ceasefire returns the conflict to a familiar dynamic: maximum pressure on Gulf logistics, escalating rhetoric from both Washington and Tehran, and an oil market that prices the worst-case scenario until proven otherwise. Traders will watch the U.S. Fifth Fleet's posture in the Gulf and any signal from Pakistan or Oman about renewed mediation.
Without a credible path back to the negotiating table, $120 Brent appears to be a question of when rather than if.