President Donald Trump said Thursday he was sticking with a naval blockade of Iranian ports, even as oil prices surged to their highest point since the war began and both governments hardened their positions.
“Their economy is crashing, the blockade is incredible,” Trump told reporters at the White House, according to Bloomberg. “Their economy is a disaster. So we’ll see how long they hold out.”
Brent crude hit $126 a barrel during Thursday’s session before pulling back to close near $114, Bloomberg reported. Prices have climbed more than 8% this week.
Markets are factoring in the risk of renewed fighting and a prolonged closure of the Strait of Hormuz, a passage central to global oil and gas flows that has been effectively shut since the U.S. and Israel launched military operations on Feb. 28, according to Bloomberg.
The price surge is reaching American drivers. Bloomberg reported that the national gasoline average has hit fresh highs, while retail prices in California have crossed $6 a gallon. The report said rising pump prices are becoming a concern for Trump’s Republican Party ahead of the midterm elections.
Trump said he expected gasoline prices to fall once the war ends.
“The gas will go down,” he said. “As soon as the war is over, it’ll drop like a rock.”
In Tehran, Iran’s new supreme leader, Mojtaba Khamenei, gave a rare public statement Thursday, vowing that Iran would not give up its nuclear or missile technologies, Bloomberg reported. He also signaled that Iran intends to keep control of the Strait of Hormuz.
Iranian President Masoud Pezeshkian also criticized the blockade in a social media post Thursday, calling it an “extension of military operations” and saying it was “intolerable,” according to Bloomberg.
Iran has said the strait will remain closed to commercial vessels until the blockade is lifted. Bloomberg reported that it remains unclear how long Iran can sustain that position before limited oil storage forces Tehran to cut production. The Iranian currency has also weakened to a fresh low in recent days.
On the military side, U.S. commanders were scheduled to brief Trump on options Thursday, Bloomberg reported, citing Axios. Central Command has prepared a plan for a limited strike campaign aimed at breaking the deadlock, according to Axios.
Bloomberg Economics analysts Becca Wasser and Chris Kennedy said they saw little sign the two sides were closing the gap.
“Trump wants to end the Iran war, but not on the terms proposed by Tehran,” they said, according to Bloomberg. “That suggests the question is no longer whether he escalates to push for a better offer, but when and how.”
Wasser and Kennedy said the most likely window for action was within the next two weeks and that renewed U.S. strikes were the most likely course.
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