Oil prices continued to rise on Tuesday as U.S. President Donald Trump intensified his rhetoric towards Iran, warning of more severe measures if the nation does not reopen the Strait of Hormuz, a crucial global oil transit chokepoint. Brent crude futures increased by 57 cents, representing a 0.5% rise, reaching $110.34 a barrel by 1202. Meanwhile, U.S. West Texas Intermediate crude futures saw an uptick of $1.26, or 1.1%, bringing the price to $113.67. Trump has issued a warning to unleash “hell” on Tehran should it not adhere to his deadline of 8 p.m. Tuesday to reopen the strait. “They could be taken out,” Trump cautioned, committing to additional measures should an agreement fail to materialize. In response to a U.S. proposal conveyed via mediator Pakistan, Tehran dismissed the notion of a ceasefire, asserting that a definitive conclusion to the conflict is essential, while also resisting calls to reopen the strait.

Iranian forces have successfully closed the Strait of Hormuz following the commencement of U.S. and Israeli attacks on February 28, thereby interrupting a crucial maritime route that usually facilitates approximately 20% of global oil transportation. Tim Waterer remarked, “Clock-watching is now playing almost as big a role in oil markets as the fundamentals themselves in the run-up to Trump’s ultimatum deadline.” The prospect of a ceasefire agreement presents a counterbalancing force and may trigger a downward relief movement if it gains momentum; however, ongoing supply concerns stemming from the Hormuz chokepoint and compromised energy infrastructure are maintaining a support level for prices. On Monday, Iran’s Revolutionary Guards detained two Qatar liquefied natural gas tankers, instructing them to remain stationary without offering any rationale, sources informed. Nevertheless, shipping data indicates a constrained level of vessel movement through the strait since the previous Thursday.

The U.N. Security Council is anticipated to cast its vote on Tuesday regarding a resolution aimed at safeguarding commercial shipping in the Strait of Hormuz. However, the resolution has been notably diluted following objections from China, which holds veto power, against the authorization of force, according to sources. On Tuesday, reports from Syrian state television indicated that explosions were audible in the Syrian capital, Damascus, and its surrounding countryside, attributed to the Israeli interception of Iranian missiles, amidst ongoing regional hostilities. On Tuesday, Saudi Arabia announced that it had intercepted and destroyed seven ballistic missiles aimed at its Eastern Region, with debris landing in proximity to energy facilities, as reported by the defence ministry. The ongoing conflict has exerted significant pressure on global crude markets, resulting in spot premiums for U.S. WTI crude reaching unprecedented levels as refiners in Asia and Europe rush to obtain alternative supplies in light of interrupted flows from the Middle East.

Saudi Arabia’s state oil company Aramco has increased the official selling price of its Arab Light crude to Asia for May delivery, establishing a record premium of $19.50 a barrel over the Oman/Dubai average. In a development that exacerbates supply concerns, Russia announced on Monday that Ukrainian drones targeted the Caspian Pipeline Consortium’s terminal located on the Black Sea, a facility responsible for managing 1.5% of the global oil supply. Russia has indicated that there has been damage to its loading infrastructure and storage tanks. OPEC+ reached a consensus on Sunday to raise oil output quotas by 206,000 bpd for May. However, this increase is expected to be largely symbolic, as significant members are unable to enhance production due to export limitations caused by strait closures.