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Oil prices look set to rise further on Monday, having closed before the weekend at their highest in nearly four years, after U.S. and Iranian threats to target energy facilities, analysts said on Sunday. President Donald Trump’s 48-hour ultimatum to “obliterate” Iran’s power plants if Tehran does not fully reopen the Strait of Hormuz has placed a “ticking time bomb of elevated uncertainty” over global markets.
Brent futures for May settled up 3.26% at $112.19 a barrel on Friday, the highest since July 2022. Analysts expect prices to spike when markets open Monday as the ultimatum deadline approaches.
What Is the Current Status of Oil Markets?
Brent gained about 8.8% last week, while front-month WTI settled around 0.4% lower compared with the previous Friday’s close. WTI’s discount to Brent hit its widest in 11 years on Wednesday, reflecting the acute disruption to Middle Eastern supplies that typically flow through the Strait of Hormuz.
The closure of the waterway has resulted in a loss of a full four days of global supply—or some 440 million barrels—during the 22 days of the war so far, according to analysts. Restoring supplies from the Middle East Gulf could take up to six months, International Energy Agency chief Fatih Birol told the Financial Times on Friday.
What Did Trump Threaten?
“If Iran doesn’t FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz, within 48 HOURS from this exact point in time, the United States of America will hit and obliterate their various POWER PLANTS, STARTING WITH THE BIGGEST ONE FIRST!” Trump posted on Truth Social late Saturday.
The ultimatum came barely a day after the president talked about “winding down” the war, now in its fourth week. The threat signals a sharp escalation rather than a drawdown of U.S. military involvement.
How Did Iran Respond?
Iran warned on Sunday it would attack U.S.-linked infrastructure, including energy and desalination facilities in the Gulf, if Trump carries out his threat. Tehran has so far refrained from attacking large desalination plants in Saudi Arabia and the UAE, which are responsible for the water supply for millions of people.
Large-scale damage to those facilities could make some cities in the Gulf uninhabitable within weeks and force mass evacuations and cascading power failures, according to the Atlantic Council. Iran has already attacked ports and refineries in Saudi Arabia, Kuwait, Bahrain, the UAE, and Qatar in retaliation for strikes on its infrastructure.
What Are Analysts Saying?
“President Trump’s threat has now placed a 48-hour ticking time bomb of elevated uncertainty over markets,” said IG market analyst Tony Sycamore. If the ultimatum is not walked back, oil prices will spike on Monday, he said.
“It clearly means more escalation, which means higher oil prices. Some are incorrectly thinking, however, that Iran may cave,” said Amrita Sen, founder of Energy Aspects. “Trump is trying to show he can out-escalate and that way ends in scorched earth for Gulf infrastructure.”
What Is the US Considering?
The Trump administration is considering plans to occupy or blockade Iran’s Kharg Island to pressure Iran to reopen the Strait of Hormuz, Axios reported on Friday. Kharg Island handles almost all of Iran’s oil exports and has been a target of U.S. strikes earlier in the war.
Such a move would represent a significant escalation, potentially drawing the U.S. into a direct ground or naval confrontation with Iranian forces.
What Is the Humanitarian Risk?
Iran’s threat to target Gulf desalination plants raises the stakes beyond energy markets. The Gulf states rely almost entirely on desalination for drinking water. Large-scale damage to these facilities could cut off water supplies to millions of people within days.
The Atlantic Council has warned that such attacks could make some Gulf cities uninhabitable within weeks, forcing mass evacuations and causing cascading power failures as cooling systems for critical infrastructure fail.
When Does the Ultimatum Expire?
Trump issued the 48-hour ultimatum late Saturday. The deadline is expected to expire Monday evening U.S. time. It remains unclear whether the U.S. will follow through on the threat to strike Iranian power plants if Iran does not fully reopen the Strait.
FAQs: Oil Price Crisis
Q: How high are oil prices?
A: Brent crude closed at $112.19 a barrel on Friday, the highest since July 2022. Analysts expect further spikes Monday.
Q: What caused the price surge?
A: The effective closure of the Strait of Hormuz has choked off about 20% of global oil supplies. Iran has attacked ports and refineries across the Gulf.
Q: How much supply has been lost?
A: Analysts estimate 440 million barrels of lost supply over 22 days of war—equivalent to four days of global consumption.
Q: What is the risk to Gulf water supplies?
A: Large-scale damage to desalination plants could make Gulf cities uninhabitable within weeks and force mass evacuations.
Q: What is the US considering?
A: Axios reported the administration is considering plans to occupy or blockade Kharg Island, Iran’s main oil export hub.
Q: When does the ultimatum expire?
A: Late Monday evening U.S. time.
Disclaimer: This information is based on inputs from news agency reports. TSG does not independently confirm the information provided by the relevant sources.