LONDON, United Kingdom – Oil prices have surged after the two-month window to negotiate a peace deal in the US-Israel war on Iran expired on Monday with no end to the conflict in sight, as U.S. President Donald Trump demanded Tehran “put up the white flag of surrender” and threatened to bomb Oman if it “gets in the way.”
Brent crude rose above $90 a barrel for the first time since July 30, trading at $91.63 on Tuesday morning, as investors priced in a more extended closure of the Strait of Hormuz, a critical chokepoint for global oil shipments.
Iran said on Monday that it would take a more aggressive stance if talks with the US failed, while Trump demanded Tehran “put up the white flag of surrender” in an interview with Fox News.
He also threatened to bomb Oman if it “gets in the way” of his effort to end the war, the second time he has directed such a threat at the longtime US strategic partner.
“If Oman gets in the way, we’ll bomb the shit out of them,” Trump told Fox News on Monday.
Strait of Hormuz tensions
A cargo ship was attacked while travelling through the strait early on Tuesday, according to the UK Maritime Trade Operations agency, after an Iranian official told Reuters that it would shift to a “fully offensive” military stance.
Fox News also reported on Tuesday that Ebrahim Zolfaghari, the Iranian military spokesperson, said vessels attempting to pass through the strait will “find several beautiful holes in their hulls.”
Even before that, just six commodity ships travelled through the waterway on Monday according to Kpler, a ship tracking company. That was slightly up compared with the weekend, when five ships transited through Saturday and Sunday combined.
Market reaction
“Oil has jumped to start the week as US-Iran relations look increasingly shaky,” said Tim Waterer, the chief market analyst at KCM. “A deal to reopen the strait of Hormuz still does not appear to be in sight, and shipping numbers remain at a trickle.”
Analysts at Deutsche Bank wrote on Tuesday that the rising oil prices were a sign of investors pricing in “a more extended closure” of the strait.
Trump’s position
U.S President Trump made the threat against Oman as he struggles to draw the conflict to a close almost six months after it began. But the US president also claimed during Monday’s interview that he was “not in a hurry” to reach a deal.
The escalation comes as global markets remain on edge over the potential for a wider conflict in the Middle East, which could further disrupt oil supplies and send prices even higher.
