Global oil markets were shaken on Monday as prices spiked after Donald Trump issued a dramatic 48-hour ultimatum to Iran, heightening concerns over a potential long-term supply crunch.
Brent crude climbed 0.6% to $112.91 per barrel, while West Texas Intermediate (WTI) rose 0.8% to $99.05 in volatile early trading, holding close to recent highs as geopolitical tensions rattled investor confidence.
The spike comes amid mounting uncertainty over the fate of the Strait of Hormuz, a critical artery through which nearly 20% of global oil supply flows. Iran has effectively blocked the passage since the escalation of conflict with the U.S. and its allies, triggering widespread disruptions in global energy markets.
President Trump warned that failure to reopen the strait within 48 hours would result in the U.S. “obliterating” key Iranian energy infrastructure. Tehran, however, has responded with defiance, threatening to fully shut the waterway and target energy and water facilities across Gulf states. Reports also indicate renewed Iranian strikes on Israel, further heightening regional instability.
The situation marks a sharp escalation, especially after earlier signals from Washington suggested a possible de-escalation. Instead, the U.S. has continued to bolster its military presence in the Middle East, deepening concerns of a drawn-out conflict with far-reaching economic consequences.
Efforts to cushion the impact have so far provided limited relief. The U.S. issued a 30-day waiver allowing the purchase of Iranian oil already in transit, but analysts say this is unlikely to offset the scale of disruption caused by restricted flows through Hormuz.
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International Energy Agency Executive Director Fatih Birol has warned that the current crisis could surpass the oil shocks of 1973 and 1979, underscoring the severity of the unfolding situation.
Meanwhile, Goldman Sachs has raised its oil price forecasts for the second time in two weeks, citing “structural risks” tied to the ongoing conflict. The bank now expects Brent crude to average $110 per barrel in March and April, up from an earlier estimate of $98.
Analysts at the firm project that oil flows through the Strait of Hormuz could remain at just 5% of normal levels for up to six weeks, with only a gradual recovery thereafter—conditions that are likely to keep prices elevated as markets factor in a sustained risk premium.
With crude already nearing $120 earlier this month, the latest developments point to a volatile outlook, as geopolitical brinkmanship threatens to tighten global supply and drive energy costs even higher.
