WASHINGTON (dpa-AFX) - Crude oil has inched higher on Tuesday as Iran remains unresponsive to U.S. threats to open up the Strait of Hormuz. With less than 24 hours remaining before the U.S. deadline expires, Iran has warned of retaliatory attacks reaching out of Arabian gulf.
WTI Crude Oil for May month delivery was last seen trading up by $0.65 (or 0.58%) at $113.06 per barrel. Earlier in the session, the price reached around $117 a barrel levels but gave ground due to some profit taking.
Since the start of the gulf war, the Strait of Hormuz remains effectively shut by Iran.
The blockade prevents oil or energy tanker transit via the narrow sea-lane from Arab countries to other nations.
The inflationary pressures due to soaring oil prices are denting the economic growth of major economies across the world.
To contain oil prices, U.S. President Donald Trump served an ultimatum to Iran to open the strait by Tuesday at 08:00 p.m. ET or face severe military attacks on its power and energy facilities.
Frustrated by Iran's reluctance, Trump continued to issue more threats through several social media messages, warning that the U.S. could take out entire Iran in one night.
In a latest message, Trump warned that 'a whole civilization will die' in Iran and added that he wished it does not happen.
In the same vein, Trump also stated that 'something revolutionarily wonderful can also happen,' thereby indicating that indirect peace talks might bear fruit.
Pakistan has been acting as a conduit for exchange of messages between the U.S. and Iran to achieve a temporary ceasefire first and later discuss the pain points. These backdoor negotiations have so far not yielded any significant breakthrough.
Iran has shrugged off the U.S. threats so far. Iran issued counterthreats to the U.S. and refused to open the strait.
As the U.S. deadline is drawing close, concerns of a fierce and expansive war in the Middle East are rising.
Adding to uncertainty amid fears of possible nuclear attacks, White House Press Secretary Karoline Leavitt stated that only the U.S. President knows where things stand and what he will do.
In a crucial attack, the U.S. and Israeli forces have struck Iran's Kharg Island through which Iran exports 90% of its oil.
The Islamic Revolutionary Guards Corps served an escalation warning to its neighbors stating that Iran will henceforth not spare gulf neighbors if they continue to host American bases.
Crude oil prices have nearly catapulted to four-year high against the backdrop of this ongoing war.
The closure of Hormuz Strait has blocked nearly 12% of the world's supply, or approximately 12 million barrels per day.
Due to surging demand versus low supply in Middle East, refiners from Asia and Europe are vying with one another to pay higher prices.
A few Arab nations that managed to export enjoyed a financial windfall.
U.S. Western Texas Intermediate crude was trading around record highs.
Despite the inability of a few member-nations to raise production, the Organization of the Petroleum Exporting Countries has agreed to hike oil output quotas by 206,000 barrels per day for May 2026.
If the war deepens, attacks on power and energy plants and even on desalination plants could cause both economic as well as a large-scale humanitarian crisis.
Rising gasoline prices will drastically reduce consumer spending which will lead to 'demand destruction.' Analysts are now more concerned of a persistent stagflation in all major economies.
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