U.S. Military said that it will block shipping traffic in and out Iran's port starting at 10 am. The U.S. military announced that it would block shipping?traffic in and out of Iran's ports starting at 10 a.m. ET (1400 GMT). This move will?prevent approximately two million barrels?of Iranian oil?a day? from reaching the world markets, further tightening the global?supply.

Details on the planned oil market blockade are provided below.

WHAT HAS BEEN ANNOUNCED?

After the weekend talks between the U.S., Iran and other negotiators in Islamabad ended without agreement, President Donald Trump announced that the U.S. Navy would "begin the process of BLOCKADADING any and ALL ships trying to enter or leave the Strait of Hormuz."

Later, the U.S. Central Command said that the blockade only applied to ships heading to or from Iran. This included all Iranian ports in the Gulf of Oman and Gulf of Iran. U.S. forces will not interfere with the freedom of navigation of vessels that transit the Strait of Hormuz from or to non-Iranian port, and more information will be provided.

Iran's Revolutionary Guards warned Trump that any military vessel approaching the Strait would be considered as a breach of ceasefire and treated harshly.

Former U.S. Naval Operations Chief, retired Admiral Gary Roughead warned that Iran might fire on vessels in the Gulf, or even attack Gulf States that house U.S. Forces.

What is the impact on oil flows?

A blockade of Iranian oil shipments would remove a major source of oil on the global markets. Iran exported 1,84 million barrels of crude per day in March, and has shipped 1,71 million bpd so far in April, compared to a full-year, average of 1.68 millions bpd by 2025.

Kpler data shows that the amount of Iranian oil on board ships has reached near-record levels. As of early this month, more than 180,000,000 barrels were floating.

What about oil flows from other Gulf producers?

The shipping traffic through the Strait of Hormuz has been nearly stopped despite the two-week ceasefire between Washington and Tehran last week.

On Monday, oil tankers avoided the Strait.

Two Pakistani flagged tankers, Shalamar, and Khairpur entered the Gulf on Sunday to load cargoes coming from the United Arab Emirates (UAE) and Kuwait. A third ship, Liberia's very large crude carrier (VLCC), Mombasa B also passed through the strait early Sunday morning and was ballasting the Gulf.

Another VLCC was the Malta-flagged VLCC Agios 'Fanourios I. It tried to pass through the strait to load Iraqi crude oil destined for Vietnam on Sunday, but turned back. She is now anchored in the Gulf of Oman.

Three supertankers loaded with oil and gas sailed through the Strait of Hormuz on Saturday. They were the first vessels to leave the Gulf after the U.S. Iran ceasefire agreement.

Kpler reports that as of Tuesday last week, there were 187 tankers in the Gulf carrying 172 millions barrels of crude and refined oil.

Which importers are most affected?

Prior to the war, Iran's oil was mainly exported?to China. China is the world's largest crude importer. The U.S. announced a waiver of sanctions last month that allowed other buyers to import Iranian crude oil, including India.

Ship tracking data from LSEG & Kpler on Wednesday showed that India will receive its first crude oil shipment from Iran for seven years.

Before the war, around 20% of the world's oil and gas exports went through the Strait of Hormuz. Most of the cargoes were headed for Asia, which is the biggest importing region.

(source: Reuters)