(April 6): Oil gained as President Donald Trump imposed a fresh ultimatum on Tehran and threatened to strike power plants and other civilian infrastructure in Iran if the Strait of Hormuz is not reopened.
Brent climbed above US$110 a barrel, while West Texas Intermediate was near US$113. In a series of fiery social-media posts, the US president threatened to bring “Hell” to the country. Tehran rejected the latest demands, and the key waterway remains closed to all but a small number of vessels.
The crude market has been pitched into turmoil by the war, which triggered an unprecedented supply shock that’s morphing into a global energy crisis. Oil and product prices have soared, stoking inflationary pressures, undermining economic growth, and piling pressure onto businesses and consumers.
Opec+ warned after a weekend meeting that damage to energy assets from the war would have a prolonged impact on oil supply even after hostilities ended. Members of the producers’ group approved an increase in output quotas — a signal of intent, given flows from the Persian Gulf remain throttled.
With the war in its sixth week, there are also signs of increasingly acute concern about near-term supplies. Brent’s prompt spread — the difference between its two nearest contracts — ballooned to more than US$10 a barrel in backwardation, a bullish pattern. That gap is both the widest since the conflict began, and far surpasses the peaks seen in 2022 when Russia invaded Ukraine.
Heading into the long Easter weekend, there were also signs of tightness in the physical market. Dated Brent, the price of shipments bought and sold in the North Sea, and the world’s most important price for real-world barrels — surged above US$140 to the highest since 2008.
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Investors have been rattled by Trump’s frequently contradictory messaging on the conflict, with the US leader oscillating between occasional claims that the war would soon be over and threats to step up attacks, including against civilian infrastructure. At the same time, he has a history of setting self-imposed deadlines that he subsequently doesn’t keep.
Trump said he plans to hold a news conference at 1 p.m. on Monday and also posted about a Tuesday 8 p.m. Eastern Time deadline, without offering any details about what he meant. On March 26, Trump gave Iran a 10-day deadline to reopen Hormuz, which would expire Monday evening.
Prices:
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- Brent for June settlement gained 1.3% to US$110.44 a barrel at 7.06am in Singapore.
- WTI for May delivery rose 1.4% to US$113.12 a barrel.
Control of Hormuz — which connects the Persian Gulf to wider markets, especially across Asia — remains central to the conflict. Tehran has imposed its authority over the waterway, permitting just a small number of vessels to pass through, including in recent days a French container ship and Japanese-owned tanker, as well as vessels from Malaysia and Pakistan.
Iran did announce on Saturday that Iraq would be exempt from its curbs in the strait, potentially allowing a pick-up in oil cargoes. Still, an Iraqi official struck a cautious note, saying the outflow would depend on whether shipping companies are willing to risk entering the trade artery.
The Foreign Ministry in Oman — which sits across the strait from Iran — said in a post on X on Sunday it discussed with Iran options to ensure “smooth flow” through the waterway. Both sides presented proposals for study, it said.
Attacks continued over the weekend. Israel — which started the war with the US in late February — said it had hit dozens of targets across Iran. Elsewhere, Tehran pressed on with its barrage of attacks on its neighbors, hitting the headquarters of Kuwait Petroleum Corp.
US forces, meanwhile, pulled off the rescue of an airman who went missing on Friday after Iran downed an American fighter jet in the country. The operation for the crew member of the F-15E jet was conducted along with dozens of US military aircraft, Trump said in a Truth Social post.
Uploaded by Jason Ng
