The White House is preparing markets for a prolonged squeeze on Iran. Under the plan being weighed, the US would maintain its naval blockade on Iranian ports while leaning on allies to raise the cost of Tehran’s chokehold on the Strait of Hormuz, a senior administration official told the AP. Trump is reviewing multiple diplomatic and policy options, the official said, speaking on condition of anonymity.

The backdrop is ugly for energy markets. The strait has been effectively blocked for two months, US gasoline averages have hit $4.23 a gallon — the highest in nearly four years — and Brent surged to $120 per barrel on Wednesday. Roughly one-fifth of global oil and LNG normally moves through the passage, and the disruption is now feeding through to broader supply chains, though some of the missing oil has been redirected through a Saudi east-west pipeline.

Tehran’s offer, conveyed via Pakistan, would reopen the strait if Washington lifts the blockade and ends the war — but parks nuclear talks until after a settlement. CNN reported Trump is unlikely to accept, with sources saying lifting the blockade without addressing Tehran’s nuclear programme would erode US leverage. Trump confirmed as much to Axios, saying the blockade is more effective than the bombing and that Iran is “choking like a stuffed pig.”

The math favours patience on both sides, for now. Iranian crude loadings have collapsed from 2.1 million bpd pre-blockade to 567,000 bpd, per Kpler, but Rapidan Energy estimates Tehran has at least 26 days of storage runway and is prepared to hold out for months.

Some US government officials continue to believe that Iran risks long-term damage to its oil reservoirs in a shut-in scenario but I struggle to believe that thinking. If it comes to that, Iran could simply pump the oil into the desert rather than risk its long-term prosperity.

Trump met energy executives Tuesday to discuss cushioning consumers and the market hated that. The longer the blockade holds, the more the crude curve has to price a structural premium — not a transient one.

WTI is down $1.49 to $105.44 today after rising over $110 earlier.