Oil prices experienced volatile trading on Monday morning in Asia after US President Donald Trump threatened to destroy key infrastructure in Iran unless it permits vessels to pass through the Strait of Hormuz.
In a strongly worded social media post on Sunday, Trump warned that the US would target power plants and bridges if the vital waterway is not reopened by late Tuesday US time.
Brent crude briefly climbed above $110 (£83.38) per barrel before easing following reports of possible US-Iran discussions over a ceasefire.
Energy shipments from the Middle East have been heavily disrupted, as Tehran has threatened to strike vessels attempting to navigate the strait in response to US and Israeli air raids since 28 February.
According to Axios, the US, Iran, and regional mediators are negotiating terms for a potential 45-day ceasefire that could pave the way for a lasting resolution to the conflict, citing sources from the US, Israel, and the region.
BBC News has not independently confirmed the report, while the White House has yet to comment.
By midday in Asia, Brent crude was up 0.7% at $109.80, while US-traded oil remained largely unchanged at $111.62.
Sushant Gupta of consultancy Wood Mackenzie noted that oil prices are likely to remain unstable, reacting sharply to developments in the conflict.
He added that attention remains on whether energy exports from the Gulf can resume to ease global supply shortages.
Disruptions in the narrow strait, which handles about one-fifth of global energy shipments, have driven up energy costs worldwide and heightened fears of rising inflation.
Oil prices had already surged past $100 per barrel last week after Trump escalated his rhetoric against Iran, warning that US airstrikes could push the country “back to the Stone Ages”.
Iranian strikes on Gulf oil facilities continued over the weekend, with Tehran claiming responsibility for attacks on petrochemical plants in Kuwait, Bahrain, and the United Arab Emirates.
On Monday, the Iranian Revolutionary Guard Corps (IRGC) warned it would intensify attacks on US economic interests if civilian infrastructure in Iran continues to be targeted.
Meanwhile, Opec+—including major producers such as Saudi Arabia and Russia—agreed on Sunday to a modest increase in oil output for May. However, the planned 206,000 barrels per day rise is expected to have limited impact, as several member countries are unable to boost production due to the ongoing conflict.
Although Trump has extended previous deadlines for Iran to lift threats against shipping in the strait, he reiterated his demands in a forceful Truth Social post.
The paragraph below contains very strong language.
Trump wrote on Sunday: “Tuesday will be Power Plant Day, and Bridge Day, all wrapped up in one, in Iran. There will be nothing like it!!! Open the Fuckin’ Strait, you crazy bastards, or you’ll be living in Hell – JUST WATCH! Praise be to Allah. President DONALD J. TRUMP”.
A few hours later, he added: “Tuesday, 8:00 P.M. Eastern Time!”
Speaking to Fox News, Trump said there was a “good chance” of reaching an agreement on Monday but added he was considering “blowing everything up and taking over the oil” if talks fail.
Senior Iranian military official Gen Ali Abdollahi Aliabadi rejected an earlier US ultimatum, describing it as “helpless, nervous, unbalanced and stupid”, and warned that “the gates of hell will open” for the US president.