Oil markets experienced significant volatility on Monday as traders reacted to a provocative threat from former U.S. President Donald Trump targeting Iran's critical infrastructure.
In a social media post laden with expletives on Sunday, Trump warned that the United States would destroy power plants and bridges in Iran unless the Strait of Hormuz—a vital waterway for global energy shipments—is reopened by late Tuesday Eastern Time. This threat follows weeks of escalating tensions, with Iran threatening to attack vessels in retaliation for U.S. and Israeli airstrikes that began in late February.
Brent crude oil initially surged above $110 per barrel in Asian trading before paring some gains. The price settled around $109.80, up 0.7%, while U.S.-traded oil remained relatively flat at approximately $111.62.
Market analysts attribute the choppy trading to conflicting signals about the conflict's trajectory. A report from news outlet Axios suggested that the U.S., Iran, and regional mediators are discussing terms for a potential 45-day ceasefire that could lead to a permanent resolution. However, this report remains unverified, and the White House has not commented.
"Oil prices will remain volatile and swing with each headline of the war's escalation and easing," said Sushant Gupta, an analyst at consultancy Wood Mackenzie. "The focus remains on whether energy shipments from the Gulf can resume to ease a supply shortage that has impacted countries around the world."
The Strait of Hormuz is a critical chokepoint, typically facilitating about one-fifth of the world's energy shipments. Disruptions there have already driven up global energy prices and raised concerns about broader inflationary pressures.
Trump's latest threat represents an escalation from previous warnings. In his social media post, he wrote: "Tuesday will be Power Plant Day, and Bridge Day, all wrapped up in one, in Iran. There will be nothing like it!!! Open the Fuckin' Strait, you crazy bastards, or you'll be living in Hell - JUST WATCH! Praise be to Allah. President DONALD J. TRUMP."
Later, he added a post specifying "Tuesday, 8:00 P.M. Eastern Time!" In a subsequent interview with Fox News, Trump indicated there was a "good chance" an agreement could be reached on Monday but threatened to "blow everything up and take over the oil" if no deal materializes.
Iranian officials have responded defiantly. Senior military officer General Ali Abdollahi Aliabadi dismissed an earlier Trump deadline as "helpless, nervous, unbalanced and stupid," warning that "the gates of hell will open" for the U.S. leader. Over the weekend, Iran claimed responsibility for strikes on petrochemical plants in Kuwait, Bahrain, and the United Arab Emirates, while the Iranian Revolutionary Guard Corps warned of intensified attacks on U.S. economic interests if Iranian civilian infrastructure is targeted.
Meanwhile, OPEC+—which includes major producers like Saudi Arabia and Russia—agreed to a modest production increase of 206,000 barrels per day for May. However, analysts note this hike is largely symbolic, as several key members are currently unable to boost output due to the ongoing conflict.
As the Tuesday deadline approaches, global markets remain on edge, with energy prices likely to continue fluctuating based on developments in this high-stakes geopolitical standoff.