Kamal Ghorui
Oil prices remained volatile on Monday as traders assessed escalating geopolitical tensions around the Strait of Hormuz. Brent crude hovered near $112 a barrel, while West Texas Intermediate traded close to $98, as markets reacted to a 48-hour final warning issued by Donald Trump.The WTI crude stood at $98.67 per barrel around 7:55 am IST. At the same time, Brent crude was hovering around $112.02/barrel. Earlier, the US President had threatened to target Iran’s power infrastructure if Tehran failed to reopen the key shipping route within the stipulated timeframe. In a social media post, he wrote, “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! Thank you for your attention to this matter.” Meanwhile, Tehran responded that it would strike critical infrastructure across the Middle East if such action was carried out. Even with the latest volatility, oil prices remain sharply higher. Brent has surged more than 50% since late February, when the US and Israel carried out strikes on Iran. The prolonged conflict has driven a stronger rally in refined petroleum products than in crude itself, fuelling concerns about inflationary pressures and unsettling broader financial markets. The situation has also left investors grappling with mixed signals from Washington. Shortly before issuing the ultimatum, Trump had indicated he might consider “winding down” US military efforts, adding to uncertainty over the direction of policy. At the centre of the crisis is the Strait of Hormuz, a vital link between the Persian Gulf and global energy markets. Shipping activity through the route has nearly come to a halt, with only limited movements permitted by Iran. As the conflict stretches into its fourth week, officials in Tehran have shown little willingness to engage on reopening the passage, focusing instead on internal stability. The disruption has forced Gulf producers to either hold back large volumes of crude or rely on restricted alternative export channels. The International Energy Agency has described the situation as the largest shock ever faced by global oil markets, even as it coordinated the release of emergency reserves among member nations. Reflecting the supply strain, Goldman Sachs has raised its forecast for Brent in 2026 to $85 per barrel from $77. The bank expects flows through Hormuz to remain at about 5 per cent of normal levels for six weeks before gradually improving. “On the physical side, the largest oil supply shock ever is still mostly a local shock, leading to extreme declines in oil in transit and tightness in Asia,” analysts including Daan Struyven said in a March 22 note, cited by Bloomberg. In a parallel move aimed at easing supply constraints, the US has allowed the sale of Iranian oil and petrochemical cargoes already loaded on tankers. The US treasury department issued a general licence permitting such shipments, as of Friday, to be sold until April 19.
