Oil Prices Climb as Trump Threatens Iran Over Strait of Hormuz Blockade

• U.S. crude jumped 2.35% to $114.16 per barrel while Brent advanced 1.72% to $110.91 following Trump's ultimatum threatening attacks if Iran doesn't open the strait by Tuesday 8:00 PM ET
• Nearly 1 billion barrels of oil will be lost by month's end, with analysts projecting total losses of 630 million barrels by end of June even accounting for alternative routes and emergency releases
• OPEC+ agreed to increase production by 206,000 barrels per day in May, though the additional supply cannot reach markets while the Strait remains closed and damaged infrastructure requires costly, lengthy repairs

Summary

Oil prices surged on Sunday following President Trump's ultimatum to Iran regarding the Strait of Hormuz blockade. WTI crude jumped 2.35% to $114.16 per barrel, while Brent crude rose 1.72% to $110.91 per barrel as of 6:08 p.m. ET.

Key Developments:

Trump issued a Tuesday 8:00 p.m. ET deadline for Iran to reopen the Strait of Hormuz, threatening strikes on Iranian power plants and bridges if the waterway remains closed. Iran has effectively blockaded the strait through tanker attacks, disrupting a critical route that previously handled approximately 20% of global oil supplies.

Supply Impact:

The closure has created the largest oil supply disruption in history. TD Securities estimates nearly 1 billion barrels will be lost by month's end, comprising up to 600 million barrels of crude and roughly 350 million barrels of refined products. Rapidan Energy projects a total net loss of 630 million barrels through June, accounting for alternative pipeline routes and stockpile releases.

Market Response:

Eight OPEC+ members (Saudi Arabia, Russia, Iraq, UAE, Kuwait, Kazakhstan, Algeria, and Oman) agreed Sunday to increase production by 206,000 barrels per day in May, though delivery remains uncertain with the strait closed. OPEC+ warned that repairing Iranian-damaged infrastructure is costly and time-consuming, affecting overall supply availability.

Outlook:

Trump indicated the conflict could extend two to three weeks, potentially into deep April. Crude, jet fuel, diesel, and gasoline prices have all surged since hostilities began, with analysts describing the supply situation as "increasingly grim."