Global oil prices rose sharply on Sunday after Iran threatened to shut the Strait of Hormuz in response to an ultimatum issued by Donald Trump over restoring oil flows.
Brent crude, the global benchmark, climbed about 1.7% to $114.09 per barrel, while US crude rose 2% to $100.29, reflecting heightened fears of supply disruption in the world’s busiest oil shipping channel.
The spike follows warnings from Trump that the United States would “obliterate” Iran’s power infrastructure if the strait is not reopened by Monday evening.
Tehran responded by vowing to fully close the waterway and target US and Israeli energy and communications assets if its facilities are attacked.
The standoff comes as the ongoing conflict in Iran enters its fourth week, significantly disrupting oil shipments through the narrow passage critical to global supply.
Analysts say prolonged disruption could sustain elevated prices, with Goldman Sachs indicating high oil prices may persist through 2027.
Rising crude costs are already pushing fuel prices higher in the United States, with average gasoline prices nearing $4 per gallon, increasing pressure on consumers.
Market experts warn that even after hostilities subside, fuel prices may take time to stabilise due to lingering global supply chain disruptions.
The geopolitical tensions also weighed on financial markets, with US stock futures for the Dow, S&P 500 and Nasdaq all declining at the open.
US Treasury Secretary Scott Bessent said Americans may accept short-term price increases if it leads to long-term stability in the Middle East.