Oil prices jumped on Monday after United States President Donald Trump and Iranian leaders exchanged threats over the strategic Strait of Hormuz, as the Middle East conflict entered its fourth week with no end in sight.
Brent crude traded above $114 per barrel earlier before settling around $109.34, while West Texas Intermediate traded between $98.50 and $99.99. OPEC’s daily basket price also showed significant volatility, with reports indicating a sharp rise to approximately $115.54 per barrel.
Trump on Saturday gave Iran 48 hours to reopen the Strait of Hormuz to shipping or face the destruction of its energy infrastructure. The ultimatum came a day after the US leader said he was considering “winding down” military operations.
Writing on Truth Social, Trump stated that the US would “hit and obliterate” Iranian power plants — “starting with the biggest one first” — if Tehran did not fully reopen the strait within 48 hours. The deadline was set for 23:44 GMT on Monday.
Iran responded by warning that Hormuz “will be completely closed” if Trump acted on his threat. Parliament speaker Mohammad Bagher Ghalibaf threatened to irreversibly destroy vital infrastructure across the region, which he said would cause oil prices to rise “for a long time.”
Iranian media reported explosions in Tehran on Monday as Israel announced another wave of strikes. Saudi Arabia and the United Arab Emirates also reported coming under fresh attacks.
Israel’s military said it would expand ground operations in Lebanon against Hezbollah, with a spokesman indicating the country faced “weeks” more fighting against Iran and the militant group.
International Energy Agency chief Fatih Birol warned of the worst global energy crisis in decades, stating that the world economy was under “major threat.”
“The global economy is facing a major, major threat today, and I very much hope that this issue will be resolved as soon as possible,” Birol said Monday. “No country will be immune to the effects of this crisis if it continues to go in this direction. So there is a need for global efforts.”
Birol added that the world was losing more oil each day than the combined impact of both 1970s oil shocks and Russia’s invasion of Ukraine.
Observers have raised concerns about a potential surge in inflation that could force central banks to hike interest rates. The choking off of fertiliser shipments has also raised fears about global food security.
