The price of Brent oil soared above $126 a barrel on Wednesday, its highest level since 2022, after Donald Trump warned the US blockade of Iranian ports could last months and peace talks remained stalled.

Surging more than 13% in 24 hours, Brent crude hit a record price since the war began on 28 February. Not since Russia’s 2022 invasion of Ukraine has Brent topped $120, with the price then peaking at $139.

Oil markets have been spooked this week as Trump appeared willing to maintain the US Navy blockade of Iranian ports, with Iran responding by keeping the strait of Hormuz all but shut to other oil tankers.

US-Iran talks set for Islamabad in Pakistan over the weekend failed to materialise, so the stalemate grinds on.

Trump on Wednesday said Iran “better get smart soon” and in a meeting with oil executives discussed what steps could be taken to “continue the current blockade for months if needed,” according to a White House official.

US officials hope the blockade will force Iran to cap its oil wells and shutter production once its oil facilities, such as Kharg Island, have filled to the brim. Analysts are unsure how long that could take.

“The blockade is somewhat more effective than the bombing,” Trump told Axios. “They are choking like a stuffed pig.”

The war is about to enter its 10th week, despite Trump’s initial projections of a 4-6 week conflict before Tehran would buckle. Global oil supplies drop by nearly 20 million barrels every day the strait is choked off.

Oxford Economics warned in a blog post that a six-month impasse in the strait could send oil prices as high as $190 by August.

Jim Reid, a market strategist at Deutsche Bank, said the jump in the oil price was feeding “growing fears about an extended stagflationary shock”, and pushing up the interest rates – or yields – on government bonds.

“Overnight we’ve seen Japan’s 10-year yield move up to 2.51%, which would be its highest closing level since 1997. It was a similar story in Europe too, with the 10-year [German] bund yield at a post-2011 high of 3.11%, whilst 10-year [UK] gilt yields hit a post-2008 high of 5.07%,” Reid added.

The economist Paul Krugman, a former New York Times columnist, said he believed most analysts have been “far too sanguine” about the effects of a prolonged Hormuz crisis.

“In my view, a full-on global recession is more likely than not if the strait remains closed for, say, another three months, which seems all too possible,” he wrote on his Substack on 20 April.

In 2008, during the global financial crisis, oil surged to record highs, with crude briefly hitting about $147. Two weeks after the US and Israel launched their first strikes on Iran, Tehran said the world needed to prepare for $200 barrels of oil.

Beyond ramping up the cost of petrol, the effects of the supply shock have cascaded through the global economy, causing inflation to rise and sparking some fears of a looming global recession.

US inflation soared in March, with prices up 3.3% over the year. Across the Atlantic, Britain is facing a £35bn economic hit and the risk of a recession in 2026 because of the war, a thinktank warned.

While Congress was questioning the US defense secretary, Pete Hegseth, over the war’s rising costs and strategy, Iran’s foreign minister, Abbas Araghchi, spent the day making phone calls to India, Kenya and Poland, trying to shore up support in his country’s staring contest with the US.

The Guardian