Oil prices fluctuated sharply in early Monday trading across Asia following a series of aggressive threats from Donald Trump on social media posts.
The US President warned to destroy Iran’s critical infrastructure, such as bridges and power plants by Tuesday unless it allows ships to cross the Strait of Hormuz.
The escalated geopolitical tension briefly pushed Brent crude above $110 a barrel. However, those gains moderated later in the session following reports that U.S. and Iranian officials may be engaged in discussions regarding a potential ceasefire. However, the White House has yet to comment.
By early afternoon in Asia, Brent crude rose 0.7 percent to $109.80, though US-traded oil remained relatively stable at $111.62.
Since the persistent closure of Strait of Hormuz by Iran, the global energy markets have been on edge. The strait is responsible for shipping around 20 percent of the world’s oil.
The disruption in the narrow passageway has sparked the concerns regarding the shipping delays, increased insurance costs, immediate spikes in crude and natural gas costs. Moreover, the rising fuel costs are also responsible for triggering the skyrocketing inflation.
Even last week, the oil prices surged past above $100 a barrel in the wake of Trump’s intensifying threats against Iran.
On Sunday, Opec+, the coalition of the members of the Organization of the Petroleum Exporting Countries like Russia and Saudi Arabia, pledged to boost a modest increase in crude production for May.
The planned hike of 206,000 barrels per day is unlikely to materialize in physical supply, as ongoing conflict leaves several key members unable to actually ramp up their operations.
