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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Disruption in the Strait of Hormuz has increased the strategic importance of Bab al-Mandab, raising fears that instability in both waterways could trigger a wider global energy and trade crisis.
Iran and the United States remain at loggerheads over efforts to agree a permanent end to the war in the Gulf, according to a senior Iranian source who said there had been no progress in talks to revive the interim deal agreed in June and define a timeframe to implement it.
U.S. President Donald Trump has called for Iran to pay compensation for decades of deaths and damage, adding a new demand to peace talks as Tehran seeks compensation and sanctions relief before reopening the Strait of Hormuz.
A criminal court in Damascus has sentenced former Syrian President Bashar al-Assad to death in absentia for premeditated murder, torture, arbitrary detention and crimes against humanity, according to Syria’s state news agency SANA.
Millions of people across Spain and Iceland are preparing on Wednesday to witness a rare total solar eclipse, when the moon will pass directly between Earth and the Sun, briefly turning daylight into darkness along a narrow path.
Iran and the United States remain at loggerheads over efforts to agree a permanent end to the war in the Gulf, according to a senior Iranian source who said there had been no progress in talks to revive the interim deal agreed in June and define a timeframe to implement it.
Iran said it was nearing a final pact with Oman defining new shipping lanes between them through the Strait of Hormuz but repeated that the U.S. must meet other conditions.
A deal on a new route for vessels through the Strait of Hormuz is "very close," Iranian Foreign Minister Abbas Araghchi has said, while warning that the reopening of the waterway depends on the U.S. meeting other conditions, including paying compensation to Iran.
An agreement between Iran and the U.S. to reopen the Strait of Hormuz is expected "soon," a U.S. official has said. The deal would result in the resumption of commercial shipping through the sea passage and the lifting of an American naval blockade on Iranian ports.
U.S. President Donald Trump said negotiations to reopen the Strait of Hormuz are progressing and suggested an agreement with Iran could be reached “soon”.
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