Brent crude climbed above $111 per barrel while WTI approached $115 as markets priced in supply disruption risks linked to the escalating West Asia conflict.
The near-complete closure of the Strait of Hormuz — a key route for nearly 25% of global oil trade — has intensified fears of a prolonged supply shock.
Analysts warn crude could surge towards $150 per barrel if the conflict persists beyond mid-May, raising the risk of global recession and inflation spikes.
Crude Jumps Past $111 as Strait of Hormuz Crisis Deepens War Fears
Oil prices extend rally as escalating tensions in West Asia and disruption risks in the Strait of Hormuz heighten global supply concerns
Freepik
Summary
Advertisement
Oil markets braced for a possible escalation of the war in West Asia and extended gains on Tuesday following US President Donald Trump’s comments. The benchmark Brent crude traded above $111 per barrel, while West Texas Intermediate (WTI) surged to $115 per barrel. On Monday, Trump reiterated his threat that if Tehran does not agree to a deal by Tuesday, the escalation of the war would be massive as he would ‘blow everything up.’ Trump declared that Iran could be ‘taken out in one night.’
On Monday, Trump confirmed that his team has received a peace proposal from Tehran; however, he deemed it ‘not good enough.’ Though he acknowledged it was a significant step towards de-escalation, he vowed that if no deal is reached, “every bridge in Iran will be decimated” and “every power plant in Iran will be out of business, burning, exploding and never to be used again.”
Advertisement
In early trade, the June contract of Brent on the Intercontinental Exchange was trading at $111.17 per barrel, up 1.28% from its previous close. The May contract of WTI on NYMEX rose 2.26% to $114.95 per barrel.
West Asia currently shows no signs of an easy de-escalation. Following Trump’s threat over the weekend, Tehran responded that if Washington did not stop the war, it would make it a ‘living hell’ for all. The near-complete closure of the Strait of Hormuz, through which 25% of global energy trade transits, has rattled markets and economies across the globe.
Analysts suggest that the war, which is entering its second consecutive month, has prolonged more than expected. If the escalation continues and the Strait remains shut beyond mid-May, it risks global crude prices hitting the psychologically crucial level of $150 per barrel.
Such a surge in global crude prices will likely trigger a global recession and economic slowdown, economists continue to warn.
Advertisement
The United Nations Security Council is expected to vote on Tuesday on a resolution to protect commercial shipping in the Strait of Hormuz. Meanwhile, the West Asian region remains highly unstable amid heightened worries of military attacks.
Saudi Arabia said on Tuesday it intercepted and destroyed seven ballistic missiles launched towards its Eastern region, Reuters reported. Explosions were heard in Damascus, Syria’s capital, as well.