Donald Trump struck an optimistic tone late last week, pointing to “very good conversations” with Iran as Tehran signalled the Strait of Hormuz would reopen. However, that ‘progress’ quickly unravelled.
Over the weekend, Iran reasserted control over the strait and shut it again, blaming the US naval blockade of its ports. Iranian gunboats reportedly fired on two vessels, an Indian-flagged tanker and a cargo ship, transiting through the strait, with at least one forced to turn back.
The reversal highlights how fragile negotiations remain. While both sides continue to signal progress, major gaps persist, particularly around Iran’s nuclear program and control of the waterway. Iran’s negotiator said there was “progress” but still a “big distance” to a deal, while Donald Trump warned the US would not tolerate “blackmail.” With the ceasefire set to expire mid-week and no formal agreement signed, the risk of renewed escalation is rising.
Markets reacted quickly to the shifting outlook. Oil prices plunged more than 10% on Friday, with Brent Crude falling from around US$98 to ~US$86 after Iran declared the strait would be “completely open,” boosting hopes of a ceasefire extension. That move is now expected to reverse following the renewed closure, with supply fears back in focus.
Geopolitically, pressure is building on US allies. Donald Trump continues to criticise countries including Australia for not doing more to secure the strait.
Canberra has taken a more cautious stance. Prime Minister Anthony Albanese said around 50 fuel tankers are en route to Australia to bolster supply, after a week spent securing additional fuel and fertiliser imports. “We want to see those ships pass,” he said, emphasising that freedom of navigation is essential for global trade, while confirming Australia is prepared to assist if required and planning for a more prolonged disruption.
