Crude prices jumped more than 1% Sunday as oil traders grappled with contradictory signals from the White House and Tehran, with energy supplies hanging in the balance of an escalating regional standoff.
President Trump is simultaneously threatening military action and signaling active diplomacy. He told Axios he is in "deep negotiations" with Iran while publicly warning of strikes on the regime's power plants and bridges beginning Tuesday unless it reopens the Strait of Hormuz, the world's most critical oil chokepoint.
Brent crude climbed above $110 per barrel as markets opened, reflecting the whipsaw of threats and talks. U.S. gasoline prices rose to $4.11 a gallon Sunday, up 13 cents in a week, according to AAA.
The strait's closure is creating real economic pressure. OPEC+ member countries agreed Sunday to boost their May production target by 206,000 barrels, but analysts question whether those barrels can actually reach global markets with the waterway blocked. Iraqi crude has reportedly transited the strait, with Iranian officials claiming they would exempt Iraqi shipments from restrictions, though the specifics remain murky.
Regional hostilities intensified over the weekend. Israel struck Iran's largest petrochemical complex in Mahshahr on Saturday, according to the New York Times. Drone strikes also hit oil infrastructure in Kuwait and Bahrain, according to reporting from the Wall Street Journal and others.
The standoff carries enormous stakes for global energy security. The Strait of Hormuz typically handles roughly one-third of all seaborne oil traded worldwide. Any sustained closure could push prices far higher than current levels and ripple through economies dependent on affordable fuel.
Trump is scheduled to hold a news conference Monday afternoon, likely offering clarity on whether the administration intends to follow through on military threats or pursue a negotiated resolution.
Traders are clearly nervous. The combination of military action already underway, explicit bombing threats, and opaque negotiations creates precisely the kind of unpredictability that sends oil markets higher, even as producers scramble to increase supply in response.
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