WEB DESK: Crude oil prices continued their upward trajectory on Tuesday, driven by escalating rhetoric from U.S. President Donald Trump regarding Iran. Trump issued stern warnings, suggesting potential military action if Iran does not reopen the vital Strait of Hormuz, a crucial passage for global oil shipments.
Brent crude futures (LCOc1) gained 57 cents, or 0.5%, reaching $110.34 per barrel at 1202 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) futures (CLc1) increased by $1.26, or 1.1%, settling at $113.67.
Trump’s comments intensified concerns about the security of the Strait of Hormuz, which Iran effectively shut after U.S. and Israeli military strikes commenced on February 28. The strait is a strategic choke point, through which approximately 20% of the world’s oil passes.
The U.S. leader warned that Iran could face severe consequences if it failed to comply with the 8 p.m. EDT Tuesday deadline to reopen the strait, indicating that Iran’s forces might be targeted if the situation escalates further.
Iran responded to U.S. proposals through mediation efforts, rejecting a ceasefire and asserting that a permanent resolution to the conflict was necessary. Tehran also resisted pressure to reopen the strait, which Iran had effectively closed, disrupting global oil flows.
Since the attacks began, Iranian forces have prevented vessels from passing through the Strait of Hormuz, with limited maritime traffic observed since last Thursday. Notably, Iran’s Revolutionary Guards detained two Qatar LNG tankers without explanation.
The United Nations Security Council is set to vote on a resolution aimed at safeguarding shipping in the region. However, the proposal is expected to be watered down after China’s veto opposition, diplomats indicated.
Regional tensions also intensified with reports of explosions in Damascus, attributed to Israeli interception of Iranian missiles. Additionally, Saudi Arabia claimed to intercept seven ballistic missiles targeting its Eastern Province, with debris falling near energy infrastructure.
Market participants are closely watching the situation, as supply disruptions and geopolitical uncertainties push spot premiums for U.S. WTI crude to record highs. Asian and European refiners are scrambling to secure alternative supplies amid the turmoil in the Middle East.
In response to these events, Saudi Aramco announced a record increase in the official selling price of its Arab Light crude for Asian buyers in May, setting a premium of $19.50 above the Oman/Dubai average.
Adding to the supply concerns, Russia reported that Ukrainian drones attacked the Caspian Pipeline Consortium’s terminal on the Black Sea, damaging infrastructure that handles 1.5% of global oil exports.
Meanwhile, OPEC+ agreed on Sunday to increase oil production quotas by 206,000 barrels per day starting in May. However, actual output increases are expected to be minimal, as key members face restrictions due to the closure of the Strait of Hormuz.
