Oil prices experienced volatile trading in early Asian sessions on Monday, yet remained clustered close to recent highs after U.S. President Donald Trump issued a 48-hour ultimatum demanding that Iran reopen the Strait of Hormuz.
Brent crude futures initially jumped as much as 2% to $114.35 a barrel, but later reversed direction and was trading down 0.2% at $112.0 a barrel by 19:16 ET (23:16 GMT).
Trump said on Saturday evening that Iran had 48 hours to reopen the Strait of Hormuz, warning the country that the U.S. would "obliterate" critical energy infrastructure if it failed to comply. Iran responded by saying it would retaliate to U.S. aggression by completely closing the Strait of Hormuz and by targeting energy and water systems in its Gulf neighbors. Reports also indicated that Iran launched fresh strikes on Israel in the early hours of Monday.
The president's hardline warning came a day after reports that he was considering "winding down" the war with Iran, even as U.S. forces continued to deploy additional troops and naval vessels to the Middle East.
Iran has effectively kept the Strait of Hormuz blocked since the U.S.-Israel conflict with Tehran began in late-February. That choke point is a major conduit for crude and petroleum product shipments, with roughly 20% of the world's oil consumption passing through the shipping lane. The effective closure has generated widespread disruption to global oil supplies.
Oil had surged to nearly $120 a barrel earlier in March and has lingered near that level amid persistent concerns that an extended conflict would sharply disrupt global supplies. Reflecting those worries, Goldman Sachs raised its oil price forecast on Sunday for the second time in two weeks, saying it now expects Brent to average $110 per barrel in March-April, up from a prior estimate of $98 per barrel.
Market dynamics and immediate context
The market reaction on Monday reflected heightened sensitivity to statements and actions that could directly affect shipping through the Strait of Hormuz. Traders reacted to the latest escalation in rhetoric and reported military activity, which left prices swinging between intraday gains and losses while holding close to recent peak levels.
With the shipping lane tied to about a fifth of global oil consumption, any sustained restriction has the potential to translate quickly into tighter physical supply conditions and heightened price volatility.
Outlook
Prices remain attuned to developments on the ground and in political statements. With both direct threats to energy infrastructure and reported fresh strikes in the region, the near-term trajectory for oil will depend on whether the Strait of Hormuz remains effectively closed and whether additional military moves or deployments alter the flow of seaborne oil shipments.