Global oil prices surged as the deadline set by Donald Trump approached for Iran. The US President issued a stark warning on the Truth Social platform, threatening dire consequences if Iran didn’t cease threats against ships in the Strait of Hormuz.
Trump’s ultimatum, due at 8pm Eastern time (1am UK time), coincided with US military strikes on Iran’s Kharg Island. The focus of the ultimatum was on Iran’s critical infrastructure, including power plants.
By mid-afternoon, Brent crude had climbed to $110 a barrel, while US West Texas Intermediate crude hovered near a four-week peak at $115.3 a barrel.
Investors were on edge, with stock markets reacting nervously to the unfolding situation and the uncertainty of Trump’s deadline extension possibility. The FTSE 100 in the UK plummeted more than 80 points, causing a £19 billion loss in listed company values.
The Strait of Hormuz, a vital route for a significant portion of global oil transportation, had effectively shut down due to ongoing US and Israeli actions since February 28.
Iran faced intensified strikes on Tuesday, targeting various key infrastructure including bridges, an airport, a petrochemical plant, and power lines, as reported by Iranian media.
Axel Rudolph, Chief Technical Analyst at IG, highlighted the tense market atmosphere as the deadline neared, emphasizing the critical nature of the Strait of Hormuz for global oil supply.
A senior official warned that the energy disruption caused by the Iran conflict surpassed all previous oil crises combined. Fatih Borel from the International Energy Agency expressed concerns over the unprecedented energy supply disruption magnitude.
Comparing it to historical events, Borel emphasized the severity of the situation, stating that Iran’s blockade of the Strait of Hormuz posed a more significant threat than past crises in 1973, 1979, and 2002.
In the UK, households were feeling the impact of rising fuel prices, with the average cost of unleaded and diesel climbing over the Easter weekend. The AA reported prices at 157.2p per liter for unleaded and 189.2p for diesel, reflecting a noticeable increase compared to the previous week.
Additionally, the AA noted a narrowing gap between supermarket fuel prices and other stations, suggesting a convergence in pricing strategies. Luke Bosdet, the AA’s spokesperson, highlighted the challenges faced by UK drivers due to varying fuel costs across different locations.