WASHINGTON (dpa-AFX) - Crude oil has surged on Monday as concerns of a deeper escalation in the Middle East rise, with Iran still reluctant to open the Strait of Hormuz despite being served another ultimatum by the U.S. that expires tomorrow.
WTI Crude Oil for May delivery was last seen trading up by $1.39 (or 1.25%) at $112.93 per barrel.
Since the gulf war began on February 28, Iran effectively closed the Strait of Hormuz, a narrow shipping seaway through which nearly 20% of the global oil and natural gas supply from Arab nations to the rest of the world takes place.
With the demand-and-supply disruption increasing, oil prices skyrocketed, sending the prices of essential goods to new highs, crippling major economies.
Iran has been utilizing its stranglehold on the crucial chokepoint as a bargaining chip in peace talks.
U.S. President Donald Trump issued multiple deadlines to Iran and extended them but Iran remained reticent.
A recent 10-day deadline, set to expire today, was extended by 20 hours by Trump until 08:00 p.m. ET on Tuesday.
In an interview with the Wall Street Journal, Trump warned Iran that it would face severe attacks if it does not come to an agreement with the U.S. by Tuesday.
In a harsh message posted through his social media platform Truth Social, Trump warned that the U.S. forces would destroy 'everything in Iran' if it ignores the threat and hinted that Iran's power plants and energy installations would be decimated.
Brushing aside Trump's threats, Iran warned of strong retaliatory attacks on U.S. forces as well as on Israel's vital infrastructures.
Oil prices stayed above the $110 a barrel level over the weekend.
In an effort to prevent a larger-degree escalation, Pakistan, Egypt, and Turkey are acting as regional intermediaries between the U.S. and Iran.
Citing informed sources, media outlets Axios and Reuters reported that a plan to implement 'a 45-day temporary ceasefire' was delivered to Iran.
With no direct talks happening between the U.S. and Iran, Reuters cited informed sources, confirming exchange of messages between the U.S. Vice President J.D. Vance, the U.S. Special Envoy Steven Witkoff, and Iran's Foreign Minister Abbas Araghchi with Pakistan's Army Chief Field Marshal Asim Munir acting as the mediator.
Axios outlined yesterday that the proposal is a 'two-stage' plan, first with an initial agreement for a '45-day pause' on attacks by both sides followed by a second stage where the warring nations would negotiate for a comprehensive deal to end the war permanently with space to extend the ceasefire if situation demands.
No official confirmation of a negotiation has been issued by U.S. officials though.
Iran's foreign ministry spokesperson Esmaeil Baghaei was quoted as saying Iran has formulated its stance and demands based on its national interests and conveyed it through the intermediaries.
Experts are skeptical if any short-term agreement could be reached before the end of Tuesday.
Concerns of further escalation are rising as U.S. forces are expected to spread out their strikes in Iran this time to possibly include civilian infrastructures, while Iran could retaliate by hitting key facilities in the gulf neighborhood.
While speaking at a press conference in the Oval Office, Trump again reaffirmed his threat to Iran, stating that the entire country can be taken out in one night and that night may be tomorrow.
Despite the push for a ceasefire, concerns of a dramatic escalation led to a surge in oil prices.
With oil flows from the Middle East disrupted heavily, Reuters reported the U.S. West Texas Intermediate crude oil prices reaching new highs led by the competing demand from Asian and European refiners.
Analysts are waiting to see how things unfold by tomorrow evening and expect oil prices to move accordingly.
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