Oil quotations ascended on Sunday, subsequent to Iran’s threat to indefinitely seal off the Strait of Hormuz in retaliation for President Donald Trump’s ultimatum demanding the resumption of oil transport through this vital waterway.
Brent crude, the global benchmark, saw a rise of 1.69%, reaching approximately $114.09 per barrel at the session’s commencement. US oil climbed by 2% to touch $100.29. Goldman Sachs had earlier, on Friday, projected that these elevated prices might persist until 2027.
Over the weekend, Trump declared that the US would “destroy” Iranian power stations should the Strait of Hormuz not be reopened by Monday evening. Iran responded by stating that if Trump were to follow through on his threats, it would completely shut down the Strait of Hormuz and keep it closed until the damaged power facilities were fully repaired.
Furthermore, Iran indicated its intention to target US and Israeli energy and communication infrastructure within the region.
The conflict in Iran, now entering its fourth week, has generated significant disruptions in oil supply, largely attributable to the de facto closure of the Strait, recognized as the world’s busiest oil transit choke point.
This surge in crude oil costs is also fueling increased gasoline prices for American consumers at the pump. The average price for a gallon in the US hit $3.94 on Sunday, marking an increase of nearly a dollar since the war began. CNN was informed by Patrick De Haan, Head of Petroleum Analysis at GasBuddy, that a gallon of gasoline could reach $4 on Monday.
Gas price recovery will be sluggish, even after the cessation of hostilities, De Haan noted to CNN.
“The pace will be quite glacial as this continues to drag out, because it will take considerably longer for markets globally to readjust,” he commented.
When questioned on the economic impact of the war on the United States during NBC’s “Meet the Press” on Sunday, Treasury Secretary Scott Bessent stated that Americans would accept “temporarily higher prices” if it secured decades of peace in the Middle East.
Equity futures also trended downward at the market’s opening on Sunday. Dow futures declined by 0.6%, equating to a drop of 237 points. S&P 500 futures fell by 0.6%, while Nasdaq futures experienced a larger retreat of 0.8%.
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