Symbolic picture Image: UBI
Oil prices are expected to increase further on Monday. Before the weekend, prices had closed at their highest level in nearly four years following threats by the US and Iran to target energy facilities.
US President Donald Trump threatened on Saturday that he would “totally destroy” Iran’s power plants if Tehran does not fully reopen the Strait of Hormuz within 48 hours. This is a significant escalation, coming just a day after his statement in which he called for an “end” to the war; This war is now in its fourth week.
Iran warned on Sunday that if Trump follows through on his threat, it would attack US-backed infrastructure, including energy and desalination facilities in the Gulf region.
ticking time bomb
On Friday, Brent futures for the month of May closed 3.26% higher at $112.19 a barrel, the highest level since July 2022. “President Trump’s threat has now placed a 48-hour ‘ticking time bomb’ of increased uncertainty on the markets,” said IG Markets analyst Tony Sycamore. He said that if this ultimatum is not withdrawn, there will be a huge jump in oil prices on Monday.
Amrita Sen, founder of ‘Energy Aspects’, said, “This clearly means that tensions will increase further, which means oil prices will increase further. However, some people are under the misconception that Iran will probably cave in.” “Trump is trying to show that he can escalate tensions further, and the consequences of doing so would be as devastating as ‘scorched earth’ for the Gulf region’s infrastructure,” he said.
Loss of about 440 million barrels so far
Iran has launched attacks on ports and refineries in Saudi Arabia, Kuwait, Bahrain, the UAE and Qatar in retaliation for attacks on its infrastructure. The closure of the Strait of Hormuz has resulted in the loss of four full days of global supply, or about 440 million barrels, during the 22-day war.
Tehran has so far refrained from attacking large desalination plants located in Saudi Arabia and the UAE; These plants are responsible for supplying water to millions of people. According to the Atlantic Council, widespread damage to these facilities would render some Bay Area cities uninhabitable within weeks, and result in mass evacuations and widespread power outages.
Brent prices rose about 8.8% last week, while WTI futures for the next month closed about 0.4% lower than last Friday’s close. On Wednesday, the difference between WTI and Brent became the highest in 11 years. International Energy Agency chief Fatih Birol said on Friday that it could take up to six months to resume supplies from the Middle East Gulf.
Also read: When Trump gave 48 hours ultimatum, Iran got furious, threatened like this