Oil Prices Climb Amid Trump's Stern Demand on Iran and Strait of Hormuz Tensions

Oil prices pushed upward on Monday, reflecting mounting jitters as President Donald Trump issued a tough 48-hour deadline for Iran to reopen the Strait of Hormuz. The spotlight is on this crucial shipping lane, as the conflict between the U.S. and Iran drags into its fourth week.

By early trading, Brent crude futures edged up 0.6% to $112.87 per barrel while U.S. West Texas Intermediate crude gained 0.3% to $98.62. The Strait of Hormuz typically handles about one-fifth of the world's oil shipments, so disruptions here reverberate swiftly across global markets.

Washington extended a temporary 30-day waiver for countries with oil cargoes already in transit from Iran, aiming to soften immediate supply interruptions. Nonetheless, geopolitical risks dominate the scene as the U.S. threatens severe retaliatory measures if Iran doesn't comply.

The International Energy Agency's head, Fatih Birol, painted a grim picture, describing the current oil crisis as potentially more severe than those seen in the 1970s, which rattled energy markets for years.

President Trump's ultimatum came alongside threats to obliterate Iran's critical energy infrastructure if the Strait remains closed by Monday night. Iran responded fiercely, warning of a complete blockade of the Strait and retaliatory strikes targeting energy and water systems in neighboring Gulf nations. Early Monday reports indicated fresh Iranian attacks on Israel, met with Israeli counterstrikes that plunged parts of Tehran into darkness.

Despite the threats, the White House signaled openness to scaling back direct conflict, even as additional forces were deployed across the Middle East to maintain pressure and preparedness.

The prolonged closure of the Strait, effective since late February, has sent shockwaves through oil supply chains. Earlier this month, crude prices nearly touched $120 a barrel due to fears over persistent supply constraints. While prices have eased slightly, they remain elevated as traders weigh the chances of a drawn-out conflict.

Adding to the tension, Goldman Sachs raised its oil price forecasts following its second hike in two weeks. The investment bank predicts Brent crude will average $110 per barrel in the near term, up from a previous $98 forecast. The firm anticipates that tanker volumes through the Strait will remain at roughly 5% of normal levels for six weeks, followed by a gradual recovery over the next month.

This prolonged bottleneck is expected to keep premiums high as markets price in the ongoing threat to supplies. Goldman Sachs now expects Brent crude to settle at an average of about $85 for the year, up from $77, with WTI also seeing an uplift to an $79 average from $72.

The oil patch remains a flashpoint connecting geopolitics and energies markets, with traders closely monitoring developments around the Strait of Hormuz. Will diplomatic maneuvering come through, or is more volatility on the horizon?