Crude Oil Futures Gain As Trump Warns Iran Over Hormuz Deadline

Crude oil futures rose on Tuesday after U.S. President Donald Trump threatened to escalate attacks on Iran unless it agreed to a deal to reopen the Strait of Hormuz by 8 pm Eastern Daylight Time (EDT).

By 9:19 am Indian Standard Time (IST), June Brent crude futures stood at $111.35, up 1.44%, while May WTI (West Texas Intermediate) crude futures rose 2.66% to $115.40.

On the Multi Commodity Exchange (MCX), April crude oil futures traded at ₹10,781 during the early hours, up 1.82% from the previous close of ₹10,588. May futures were at ₹9,444, up 1.38% from ₹9,315.

How Have Crude Oil Futures Priced Earlier?

Brent crude oil futures initially surged as much as 2.6% before reversing those gains, trading 0.4% lower at $108.62 per barrel by 4:26 a.m. Eastern Time (ET) on Monday.

Meanwhile, US WTI oil futures fell 1.6% to $109.59 per barrel, after having climbed as much as 3.5% earlier in the session to reach $115.48.

Speaking at a press conference, Trump said Iran could be taken out in one night and that night might be Tuesday. "Every power plant and bridge in Iran will be destroyed," Trump stated.

He added that regime change in Iran had led to a more moderate government, and that he had given Iran opportunities to end the war, but those offers had not been accepted.

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How Is The Hormuz Closure Affecting Global Supply?

Iranian forces closed the Strait of Hormuz following the start of U.S. and Israeli attacks on 28 February, disrupting a crucial waterway that normally handles around 20% of global oil shipments.

In response, Iran cautioned that it would retaliate if the U.S. attacks infrastructure on its soil, and threatened to strike energy infrastructure across the Gulf region.

This shutdown, along with others that are related to the war, is disrupting the global economy badly. In the U.S. itself, the price of gasoline per gallon has risen above $4 for the first time ever since the Russia-Ukraine war of 2022. Prices of food items have also started rising in the U.S.

Jet fuel prices are also climbing, reaching $195 at the end of March. These rising costs, combined with supply shortages, have prompted some airlines to either pass the added expenses on to travellers or cancel flights altogether.

Sources:

The Hindu Business Line

Reuters

Business Insider