Crude Oil Pares Massive Losses

WTI crude futures fell to below $110 per barrel on Monday after climbing as high as $115.5 earlier in the session, as reports of a potential Middle East ceasefire weighed on prices. The US, Iran, and a group of regional mediators are said to be negotiating terms for a possible 45-day truce that could pave the way for a more permanent resolution to the conflict. This shift in sentiment followed President Donald Trump issuing a fresh ultimatum to Iran and escalating threats against its civilian infrastructure if it failed to reopen the Strait of Hormuz. Tehran rejected the latest demand, leaving Hormuz effectively closed. Separately, OPEC+ warned after a weekend meeting that war-related damage to energy infrastructure could have lasting effects on oil supply even after hostilities ease. The group approved an increase in output quotas to help address a global supply shortfall, although Iran indicated on Saturday that Iraq would be exempt from its restrictions in the strait.

WTI crude futures climbed to as high as $115.5 per barrel on Monday before giving up most of the advance, after President Donald Trump issued a fresh ultimatum to Iran and intensified threats targeting its civilian infrastructure if it failed to reopen the Strait of Hormuz. Trump warned he would bring “Hell” to Iran and set a new deadline for Tuesday at 8 p.m. Eastern Time, while also signaling plans to hold a news conference at 1 p.m. on Monday. Tehran rejected the latest demand, leaving Hormuz, an essential route for roughly a fifth of global oil and gas flows, effectively shut. Separately, OPEC+ cautioned after a weekend meeting that war-related damage to energy infrastructure could have lasting repercussions for oil supply even after the conflict subsides. The group approved a rise in output quotas to help address a global supply shortfall, although Iran indicated on Saturday that Iraq would be exempt from its restrictions in the strait.

WTI crude oil futures soared over 11% to cross $112 per barrel, the highest in nearly four years, regaining traction on a volatile session as markets reconsidered the magnitude of supply risks from the ongoing war in the Persian Gulf. US President Trump pledged to escalate attacks on Iran and their infrastructure in the next weeks if Tehran does not accept American ceasefire conditions, prompting Tehran to retaliate the aggressive rhetoric. Earlier in the session oil prices have eased on reports that Oman and Iran were coordinating a toll for tankers crossing the Hormuz chokepoint, but optimism over the outlook of normalized supplies was short-lived. Consequently, dated Brent benchmarks rose to past $140 per barrel, the highest since 2008. Meanwhile, the UK is hosting talks with dozens of countries on securing the route, while OPEC+ is considering a potential output increase, though any additional supply is unlikely to impact markets in the near term.