Oil prices climbed sharply on Tuesday as the world watched anxiously for a U.S.-imposed deadline for Iran to reopen the Strait of Hormuz, the crucial waterway through which roughly a fifth of global oil passes.
President Donald Trump warns that Iran could face attacks on bridges and power plants if Tehran fails to comply.
By early trading, Brent crude had risen $1.74, or 1.6%, to $111.51 a barrel, while U.S. West Texas Intermediate crude jumped $3.45, or 3.1%, to $115.86.
Trump has set a deadline of 8 p.m. EDT Tuesday (00:00 GMT Wednesday), threatening to rain “hell” on Tehran if the strait remains closed. But Iran, rejecting a ceasefire proposal mediated by Pakistan, insisted that only a permanent end to the conflict would satisfy its terms.
The standoff has left the oil market on edge. Priyanka Sachdeva, senior market analyst at Phillip Nova, said, “Oil is holding its gains because the battlefield risk is no longer theoretical. Attacks on energy and shipping assets continue, and even if the war ends, damage to infrastructure could sideline barrels for months.”
Exports from Gulf producers have already been hit hard, with the strait effectively closed since 28 February following U.S. and Israeli strikes.
Tim Waterer, Chief Market Analyst at KCM Trade, noted, that “Clock-watching is now playing almost as big a role in oil markets as the fundamentals themselves in the run-up to Trump’s ultimatum. Supply worries from Hormuz and damaged facilities are keeping prices elevated.”
Diplomatic efforts continue, with the United Nations Security Council expected to vote on a resolution to protect commercial shipping in the strait. However, the measure has been watered down after China opposed authorising force.
Meanwhile, regional tensions show no sign of easing. Explosions were reported near Damascus as Israel intercepted Iranian missiles, while Saudi Arabia said it destroyed seven ballistic missiles aimed at its Eastern Region, with debris falling near energy facilities.
The conflict is squeezing global oil supply. Spot premiums for U.S. crude have hit record highs as Asian and European refiners scramble for alternatives.
Saudi Aramco has raised the official selling price of Arab Light crude to Asia for May delivery, setting a record premium of $19.50 above the Oman/Dubai average.
Adding to the squeeze, Russia reported damage to the Caspian Pipeline Consortium terminal after Ukrainian drone attacks, affecting 1.5% of global oil supply.
OPEC+ agreed on Sunday to lift oil output quotas by 206,000 barrels per day in May, but the increase is largely symbolic, as strait closures are preventing key producers from exporting the extra oil.
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Iran reopened the Strait of Hormuz to commercial shipping on Friday (17 April) for the first time since the U.S. and Israel killed Iran's ex-Supreme Leader in air strikes, triggering the Middle East conflict, at the end of February. A U.S. blockade on Iranian ports, however, remains in force.
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U.S. President Donald Trump says Israeli and Lebanese leaders have agreed to a 10-day ceasefire that includes Hezbollah, raising cautious hopes of a pause in hostilities after weeks of escalating tensions.
Iran temporarily reopened the Strait of Hormuz on Friday (17 April) following a ceasefire agreement in Lebanon, raising optimism about peace talks, but Tehran warned that it could close the crucial waterway again if the recent U.S. Navy blockade of Iranian ports continued.
Global shipping through the Strait of Hormuz has shown signs of partial recovery after Iran announced it was open to commercial vessels during a limited ceasefire, though uncertainty remains over security conditions and compliance rules.
The Strait of Hormuz has reopened, Iran’s Foreign Minister Abbas Araghchi and U.S. President Donald Trump said on Friday (17 April), although Washington warned its naval blockade on Iran would remain until a peace deal is reached.
Iran reopened the Strait of Hormuz to commercial shipping on Friday (17 April) for the first time since the U.S. and Israel killed Iran's ex-Supreme Leader in air strikes, triggering the Middle East conflict, at the end of February. A U.S. blockade on Iranian ports, however, remains in force.
Iran has cautiously welcomed the ten-day ceasefire between Israel and Lebanon stressing that it is an integral part of Tehran’s set of its conditions for an end to the ongoing conflict with Washington.
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