Oil prices experienced volatile trading on Monday following US President Donald Trump’s threat to strike Iranian infrastructure if the country does not reopen the Strait of Hormuz.
In a highly charged social media post on Sunday, Trump warned that US forces would target power plants and bridges unless the critical waterway is accessible to shipping by late Tuesday US time.
Brent crude briefly climbed above $110 a barrel before easing to around $107 after reports emerged that the US, Iran, and regional mediators were discussing terms for a potential 45-day ceasefire. According to Axios, the talks could pave the way for a longer-term resolution to the ongoing conflict.
A White House source told the BBC that the proposal is “one of many ideas” and that Trump has not formally approved it, noting that “Operation Epic Fury continues.” The president is expected to provide further comments during a press conference later on Monday.
Disruption to Global Energy
Tensions in the Gulf have disrupted oil and gas shipments since late February, as Tehran has threatened to strike vessels in response to US and Israeli airstrikes. About one-fifth of the world’s energy shipments normally pass through the narrow strait, making any disruption a significant concern for global markets.
Sushant Gupta of consultancy Wood Mackenzie said oil prices are likely to remain highly sensitive to news from the conflict, as markets await clarity on whether Gulf energy shipments can resume.
Last week, oil prices rose above $100 per barrel after Trump warned that ongoing US airstrikes could set Iran “back to the Stone Ages.” Iranian forces continued their attacks on petrochemical facilities in Kuwait, Bahrain, and the UAE over the weekend.
Regional and OPEC+ Responses
The Iranian Revolutionary Guard Corps (IRGC) stated that attacks on US economic interests would intensify if Iran’s civilian infrastructure continues to be targeted. Meanwhile, OPEC+ members agreed to a modest production increase of 206,000 barrels per day starting in May. However, several key producers face practical constraints due to the ongoing conflict, limiting the impact of the increase.
Trump has repeatedly extended deadlines for Iran to remove threats to shipping but has continued to issue stern warnings on social media, including specifying the timing of his ultimatum. Iranian military officials dismissed the threats as “helpless and unbalanced,” warning that any escalation could have serious consequences for the US.
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