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Oil markets react to Trump's threats and ceasefire talks
Global oil prices experienced volatile trading in Asia on Monday following a late-night social media post by US President Donald Trump, in which he threatened to target Iranian infrastructure unless the Strait of Hormuz is reopened by Tuesday evening.
Trump sets deadline for Iran
In a profanity-laden message on Truth Social, Trump warned that the US would strike power plants and bridges in Iran if the critical waterway-through which a fifth of the world's energy shipments pass-remains closed. He later clarified the deadline as 8:00 PM Eastern Time on Tuesday.
Trump also told Fox News there was a "good chance" of reaching an agreement with Iran on Monday but suggested he might resort to extreme measures, including seizing oil assets, if negotiations failed.
Iran vows retaliation amid escalating tensions
The Iranian Revolutionary Guard Corps (IRGC) responded by threatening to intensify attacks on US economic interests if civilian infrastructure in Iran continues to be targeted. Over the weekend, Tehran claimed responsibility for strikes on petrochemical facilities in Kuwait, Bahrain, and the UAE.
Senior Iranian military official Gen. Ali Abdollahi Aliabadi dismissed Trump's earlier ultimatum as "helpless, nervous, unbalanced, and stupid," warning that "the gates of hell will open" for the US president.
Ceasefire talks and market impact
Brent crude initially surged above $110 a barrel before paring gains after reports emerged of US-Iran ceasefire discussions. News outlet Axios, citing unnamed sources, reported that the US, Iran, and regional mediators were negotiating a potential 45-day truce that could lead to a permanent resolution. Neither the White House nor BBC News has confirmed the report.
By midday in Asia, Brent crude stood 0.7% higher at $109.80, while US-traded oil remained relatively stable at $111.62.
"Oil prices will remain volatile and swing with each headline of the war's escalation and easing,"
Sushant Gupta, Wood Mackenzie
Analysts say the focus remains on whether energy shipments from the Gulf can resume to alleviate global supply shortages.
OPEC+ increases output, but impact limited
On Sunday, OPEC+ agreed to a modest production increase of 206,000 barrels per day in May. However, the boost is largely symbolic, as several key members are unable to raise output due to the ongoing conflict.
The disruption in the Strait of Hormuz has already driven oil prices above $100 a barrel, raising concerns about higher global inflation.
Uncertainty looms as deadline approaches
Trump has repeatedly postponed deadlines for Iran to reopen the strait but reiterated his demands in the latest post. The situation remains fluid, with markets closely watching for developments ahead of Tuesday's deadline.
