Crude oil prices retreated slightly from initial gains Monday as the United States and Iran continued to exchange threats, keeping global energy markets on edge. Brent crude fell to around $111 a barrel, after briefly reaching almost $114, according to market reports, down from $112.19 on Friday. West Texas Intermediate (WTI) hovered around $98 a barrel.
The price of oil has surged since February 28, when the U.S. And Israel began military operations against Iranian targets, climbing from a more stable $70 a barrel. The latest escalation came Saturday when President Donald Trump threatened to attack Iran’s power plants, starting with its largest facility, if Tehran did not reopen the Strait of Hormuz within 48 hours. Iran responded Sunday with a warning that it would target energy and water infrastructure belonging to the U.S. And Israel across the Middle East if its fuel and energy infrastructure were attacked.
“If Iran’s fuel and energy infrastructure is attacked by the enemy, all infrastructure of energy, information technology, and desalination facilities belonging to the US and the (Zionist) regime in the region will be targeted,” Ebrahim Zolfaqari, a spokesperson for Iran’s military command, said in a statement posted online.
The Strait of Hormuz, a strategically vital waterway, is a choke point for approximately 20% of the world’s oil supply and liquefied natural gas. Iran has disrupted shipping in the Strait, targeting vessels it believes are connected to the U.S. And Israel, while allowing some other traffic to pass. The potential closure of the Strait is a primary driver of the recent price increases.
The situation presents a challenge for President Trump, who campaigned in part on a promise to lower energy prices for American consumers. The national average price of gasoline is approaching $4 a gallon, according to recent reports. The conflict, combined with Trump’s existing tariff policies, has contributed to rising prices for a wide range of goods in the U.S., diminishing expectations that the Federal Reserve will cut interest rates in the near future.
Beyond oil, the conflict is disrupting the supply of other critical materials and commodities, including helium, pharmaceuticals, and fertilizer. Estimates suggest that nearly 10 million barrels per day of oil supply has been disrupted, representing roughly 10% of global output, according to reports. Key producers in the Gulf region, including Saudi Arabia, Iraq, the UAE, and Kuwait, have reported production cuts due to escalating tensions and infrastructure risks.
Rory Johnston, oil market researcher and founder of Commodity Context Corp., suggested that Trump had “posted himself into a corner” with the 48-hour ultimatum. “It is highly unlikely that Tehran will agree to Trump’s terms on such an accelerated timeline under the threat of attack. And Iran is clearly able and willing to match any escalation,” Johnston said.
The International Energy Agency chief Fatih Birol warned Monday that the global economy is under “major threat” from the energy crisis caused by the conflict in the Middle East, stating that “no country will be immune” to its effects. Asian markets reacted negatively Monday, with Japan’s Nikkei 225 index falling 3.5% and South Korea’s Kospi plunging 4.9%.
The Trump administration has taken steps to stabilize crude oil prices, including releasing 172 million barrels from the Strategic Petroleum Reserve and easing sanctions, but the impact has been limited by the ongoing geopolitical tensions. Tehran has warned that any attack on its fuel sites will be met with retaliatory strikes on infrastructure across the region, leaving the situation unresolved as the 48-hour deadline approaches.
