The deadline passed on Monday for the start of a US military blockade of ships leaving Iran's ports, and Tehran threatened to retaliate against ports of its Persian Gulf neighbours after weekend talks on ending the war broke down.
Oil prices climbed over $100 per barrel, with no sign of a swift reopening of the Strait of Hormuz to ease the biggest ever disruption in supplies and broader concerns over the durability of a two-week ceasefire agreement reached last week.
Since the war started on February 28, Iran has effectively shut the strait to all vessels except its own, saying passage would be permitted only under Iranian control and subject to a fee.
US President Donald Trump said Washington would block Iranian vessels and any ships that paid such tolls and that any Iranian "fast-attack" ships that went near the blockade would be eliminated. US Central Command said the measure would take effect from 10:00 ET (14:00 GMT) on Monday.
Brigadier General Reza Talaei-Nik, a spokesperson for Iran’s Ministry of Defence, warned that efforts by foreign military to police the strait would escalate the crisis and instability in global energy security.
NATO allies including Britain and France said they would not be drawn into the conflict by taking part in the blockade, stressing instead the need to reopen the waterway, through which about one-fifth of the world's oil normally passes.
The ceasefire that halted six weeks of US and Israeli airstrikes looked in jeopardy, with only a week left to run. Washington said Tehran rejected its demands at weekend talks in Islamabad, the highest-level discussions since Iran's 1979 Islamic Revolution.
The US military's regional Central Command said the blockade would be, "enforced impartially against vessels of all nations," entering or leaving Iranian ports in the gulf and the Gulf of Oman.
"The blockade will not impede neutral transit passage through the Strait of Hormuz to or from non-Iranian destinations," Central Command said in a note to seafarers seen by Reuters on Monday.
Two Iranian-linked tankers, the Aurora and New Future, laden with oil products, left the strait on Monday before the deadline, according to LSEG data.
An Iranian military spokesperson called any US restrictions on international shipping "piracy," warning that if Iranian ports were threatened, no port in the gulf or Gulf of Oman would be secure. Any military vessels approaching the strait would violate the ceasefire, Iran's Revolutionary Guards said.
Trump said that Iran's navy had been "completely obliterated" during the war, adding that only a small number of "fast-attack ships" remained.
"Warning: If any of these ships come anywhere close to our BLOCKADE, they will be immediately ELIMINATED, using the same system of kill that we use against the drug dealers on boats at Sea. It is quick and brutal," Trump wrote on social media, referring to the US strikes carried out against suspected drug boats in the Caribbean and Pacific.
Israel has continued to bombard Iran-backed Hezbollah in Lebanon and on Monday Israeli troops launched an attack to seize a key south Lebanon town from the group. Israel and the US have said the campaign against Hezbollah was not part of the ceasefire, while Iran has insisted it is.
Iran has brought new demands, including recognition of its control of the waterway, lifting of sanctions and the withdrawal of forces from US military bases across the Middle East.
Pakistani Prime Minister Shehbaz Sharif said efforts were still on to resolve the conflict after the direct talks between the US and Iran in Islamabad at the weekend.
Benchmark oil prices, which had eased last week after the ceasefire was announced, traded around five per cent higher on Monday, off the day's highs but still above $100 a barrel.
Traders say the main benchmarks - used to set prices for trillions of dollars' worth of commodities worldwide - actually understate the severity of a disruption with no precedent in modern times.
Trump has long said a bump in US gasoline prices would be short-lived. But he told Fox News' "Sunday Briefing" that they could stay high through November's midterm elections.
Iran's chief negotiator, Mohammad Baqer Qalibaf, posted a map of Washington-area gasoline prices on social media with the comment: "Enjoy the current pump figures. With the so-called 'blockade'. Soon you'll be nostalgic for $4–$5 gas."
(Reporting by Reuters bureaus; Writing by Peter Graff and Keith Weir; Editing by Hugh Lawson and Ros Russell)
