Key Points:
- Trump threatened Iran with strikes on power plants and bridges if the strait is not opened by Tuesday
- Brent rose above $111, and in the spot market oil climbed above $140. This is the highest since 2008
- OPEC+ decided to slightly increase production, but supplies from the Persian Gulf are still intermittent
On Monday, oil prices rose again in Asian trading. The reason was new statements by Donald Trump on Iran.
He said he was ready to strike power plants and bridges if Tehran does not open the Strait of Hormuz by Tuesday.
The situation is getting tougher. The conflict has been going on for about six weeks, and now it is clearly reaching a new level. There is almost no talk of negotiations yet.
Trump Calls Tuesday ‘Day of Strikes on Power Plants and Bridges’
Trump wrote on social media that Tuesday will be the ‘day of power plants and bridges.’ At the same time, he demanded the opening of the Strait of Hormuz. He spoke harshly to Tehran and made it clear he is ready for a forceful scenario.
It seems Washington’s patience is running out. Negotiations around the strait have stalled. Tensions are only rising.
Oil immediately went up. Brent broke through $111 per barrel. The session gain was about 1.9%. WTI stayed close, around $112.
Iran rejected the demands. The strait remains closed to most ships. Because of this, the market is already feeling a supply shortage. All this is beginning to resemble a full-fledged energy crisis.
Fuel prices are rising. This hits the economy. Business is finding it harder, and consumers are also feeling the pressure. In the US, gasoline has risen by about $1 per gallon since the conflict began.
Now attention turns to inflation data. The March report will be released on Friday. Growth is expected to be the strongest since 2022.
OPEC+ announced a small production increase for May over the weekend. It’s about 206,000 barrels per day. But the market is barely reacting. Many countries simply cannot quickly ramp up volumes.
There is another factor. Russian supplies are also under pressure. Ukrainian drones attacked an export terminal in the Baltic Sea.
Tension is already noticeable in the market. The spread on near-term Brent contracts exceeded $10. This is more than in 2022.
On the physical market, the situation is even more tense. Dated Brent is already above $140. Such levels were last seen in 2008.
Negotiations Stall, Attacks Continue
Iran officially informed mediators that it will not meet with US representatives in Islamabad. Attempts to agree on a ceasefire have stalled.
At the same time, Tehran partially opened the Strait of Hormuz. Passage is allowed only for ships from countries Iran considers friendly. Iraq received a separate exemption, but carriers are still in no hurry to enter the strait.
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Oman said it discussed with Iran options to restore vessel movement.
Amid supply disruptions, buyers around the world are actively seeking alternative oil. Supplies from the US Gulf of Mexico and the North Sea are being used.
Strikes continue. Israel attacked targets in Iran over the weekend. In response, Tehran struck the headquarters of Kuwait Petroleum and shut down a petrochemical plant in the UAE.
Asian markets opened without sharp moves. Japanese Nikkei rose by 0.7%, South Korean stocks added about 2%.
Gold fell by about 1% and is holding around $4,630. Rising energy prices are lowering expectations for rate cuts, which is weighing on the market.
