Global Business Today
Oil Prices Rise as Hormuz Shutdown Persists Ahead of U.S. Deadline
Global oil prices continued their upward trajectory on Tuesday as tensions escalated over the continued closure of the Strait of Hormuz, a critical global oil transit route, with a U.S. ultimatum to Iran fast approaching.
Crude markets reacted sharply to geopolitical uncertainty, with Brent crude climbing by $1.74, or 1.6 per cent, to $111.51 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) surged even higher, gaining $3.45, or 3.1 per cent, to settle at $115.86 per barrel.
At the heart of the surge is the sustained disruption of oil flows through the Strait of Hormuz, a vital corridor responsible for transporting nearly one-fifth of the world’s oil supply. Shipments from major Gulf producers have slowed significantly, tightening global supply and intensifying competition among buyers.
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The situation has been compounded by a firm ultimatum from U.S. President Donald Trump, who warned of severe military consequences if Iran fails to reopen the strait before the set deadline. He threatened strikes targeting key Iranian infrastructure, including bridges and power facilities, vowing to unleash “hell” if compliance is not achieved.
Tehran, however, has pushed back, rejecting calls for a ceasefire and insisting that only a permanent resolution to the broader conflict would justify reopening the waterway. Iranian authorities maintain that the closure followed coordinated military actions by the United States and Israel earlier in the conflict.
Beyond the Gulf, the conflict’s ripple effects are being felt across the region. Reports from Damascus indicate fresh explosions after missile interceptions, while Saudi Arabia confirmed it had successfully neutralised seven ballistic missiles aimed at its Eastern Region. Debris from the intercepted projectiles reportedly landed near critical energy infrastructure, raising further concerns over supply security.
Amid these developments, Saudi Arabia’s state oil giant Saudi Aramco has responded by increasing its official selling price for Arab Light crude destined for Asia. The new premium, set at $19.50 per barrel above the Oman/Dubai benchmark, marks a record high and reflects tightening supply conditions.
Efforts to stabilise the situation diplomatically remain uncertain. The United Nations Security Council is expected to deliberate on a resolution aimed at safeguarding commercial shipping through the strait. However, the proposal has reportedly been weakened following opposition from China, which resisted provisions that would authorise the use of force.
As supply constraints deepen, refiners in Asia and Europe are scrambling to secure alternative crude sources, driving spot premiums for U.S. oil to unprecedented levels. The ongoing disruption underscores the fragility of global energy markets and the outsized role of geopolitical risks in shaping price movements.
