Oil prices surged, with no sign of a swift reopening of the Strait of Hormuz to ease the biggest ever disruption in supplies.
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.
U.S. 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. U.S. Central Command said the measure would take effect from 10 a.m. ET (1400 GMT) on Monday.
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.
A ceasefire that halted six weeks of U.S. 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.
Blockade comes into force
The U.S. 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 U.S. 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.
On Sunday, Trump had posted on social media that ships paying Iran an "illegal toll" would not be granted safe passage, adding, "Any Iranian who fires at us, or at peaceful vessels, will be BLOWN TO HELL!"
