Oil prices continue to surge amid the escalation of the US-Iran geopolitical conflicts. The market prices were initially high, but they jumped abruptly after Iran decided to strike back. Another major reason that fueled the prices was US President Trump’s constant threat to Iran.
On Tuesday, April 7, US President Donald Trump threatened to destroy key Iranian infrastructure if his demands were not fulfilled by the given deadline. This added to the previously existing market instability.
Brent crude reached close to $111 per barrel after already gaining 0.7%. The West Texas Intermediate traded around $115, highlighting the highest close since June 2022.
Similarly, crude oil prices on the Multi Commodity Exchange (MCX) followed the price hike trend, rising as high as 2% to 10,786 per barrel. In his warning, Trump insisted that he would rain “hell” on Tehran if it did not meet his 8 p.m. EDT Tuesday deadline to reopen the strait. He also added that the country “could be taken out” if Iran does not abide by his agreement.
After US and Israeli strikes began on February 28, Iran effectively closed the Strait of Hormuz. This eventually disrupted a major route that usually carries around 20% of the global oil supply.
The conflict has shaken the global crude markets, with spot premiums for US WTI crude climbing to record levels. All thanks to refiners across Asia and Europe looking for alternative supplies amid disrupted Middle Eastern flows.
With the constant tension created due to war, experts suggest that these could open into a new era of war zones. On top of this, in response to a US proposal relayed through Pakistan, Tehran rejected the idea of a ceasefire. Tehran demanded a permanent end to the war and refused to reopen the strait against Trump’s demand. The greatest impact is on the raw materials and tourism businesses. So, the current instability will continue if the war doesn’t stop.