Oil slide as Trump warns Iran to open Strait of Hormuz by Tuesday
Satellite image of the Strait of Hormuz, which connects the Persian Gulf to the Gulf of Oman, a critical choke point for global energy supply.
Gallo Pictures | Getty Images
Oil prices fell sharply in volatile trading after U.S. crude briefly rose above $114 a barrel after President Donald Trump gave Iran until Tuesday to open the Strait of Hormuz or face attacks on its power plants.
In May, US West Texas Intermediate oil fell nearly 2% to $109.3 per barrel. International benchmark Brent crude oil prices fell more than 1% to $107.8 per barrel as of 4:15 a.m. ET.
Trump issued expletive-filled warning on Sunday social media post Iran will “live in hell” if it does not open the Strait. The president has threatened to bomb the country’s power plants and bridges.
Trump then said, “Tuesday, 8pm Eastern Time!” without further explanation.
Iran effectively kept the Strait closed with attacks on oil tankers. The sea route connects the Persian Gulf to world markets. Before the war, approximately 20% of global supplies passed through the Bosphorus.
The closure of the strait triggered the largest oil supply disruption in history. Prices of crude oil, jet fuel, diesel and gasoline have increased since the start of the war.
Trump said in his national address last Wednesday that the war would last two or three weeks.
About 1 billion barrels will be lost by the end of the month, including 600 million barrels of crude oil and about 350 million barrels of refined products, according to TD Securities.
“The barrel math is getting increasingly grim as the conflict is expected to last through at least the end of April,” Ryan McKay, senior commodity strategist at TD Securities, said in a note to clients on Thursday.
Rapidan Energy projects a total net loss of 630 million barrels of oil and products by the end of June, taking into account redirected flows through pipelines, emergency stockpile releases and stock reductions.
eight members OPEC+ An agreement was reached on Sunday to increase production by 206,000 barrels per day in May, but it is unclear how oil will reach the global market with the Strait still closed.
Kuwait Oil Company It said on Sunday that many of its operational facilities were attacked by drones, causing serious damage.
OPEC+ warned that repairing energy infrastructure damaged by Iranian attacks “is both costly and time-consuming, thus affecting overall supply availability.”
The eight members of OPEC+ are Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria and Oman.
