Oil seesaws after Trump’s latest threats on Iran

Oil and stock prices fluctuated Monday as attacks continued in the Middle East and investors weighed threats by President Donald Trump to escalate strikes on Iran against diplomatic efforts to forge a ceasefire agreement. Markets were closed for holidays in parts of Asia and all of Europe.

Trump had taunted Iranian leaders Sunday after the rescue of a U.S. airman whose jet had been shot down. In an expletive laden social media post, the president demanded that Iran open the Strait of Hormuz, a vital passageway for oil shipments in the Middle East, by Tuesday or face attacks on power plants, bridges and other civilian infrastructure.

On Monday, both Iranian officials and Trump floated the possibility that diplomacy may yet avert further escalation. Iran’s proposal consisted of 10 clauses, Iranian state media said, and called for a “permanent end to the war in line with Iran’s considerations.” It also included a protocol for safe passage through Hormuz. Trump said the proposal was significant but “not good enough.”

During a news conference at the White House on Monday, U.S. oil prices climbed as investors reacted to ramped-up language from Trump. The domestic benchmark retreated slightly once his remarks concluded. Speaking to reporters, the president renewed his threat to attack Iran if it doesn’t open the Strait of Hormuz by Tuesday night.

The conflict, now in its sixth week, has caused energy shocks that could drive up the cost of living around the world and deprive vulnerable regions of staples like electricity, clean water and cooking fuel.

Global oil prices waver

The price of Brent crude, the global benchmark for oil, seesawed in early trading, but settled 0.7% higher at $109.77 a barrel for June delivery. The price is up about 50% since the war began.

West Texas Intermediate crude, the U.S. oil benchmark, settled at $112.41 a barrel for May delivery, up 0.8%. The price of WTI is up more than 60% since the first strikes in Iran. WTI usually trades at a lower price than Brent — the gap is partly the result of differences in each oil type’s futures contracts — which are the main way for trading oil.

Since fighting began, investors and analysts have been focused on the Strait of Hormuz, the narrow waterway between Iran and Oman that normally carries as much as one-fifth of the world’s oil supply. Shipping traffic exiting the Persian Gulf through the strait has been throttled since the war began, but there was a “noticeable uptick” in ships transiting the strait over the weekend, according to Kpler, a global ship-tracking company. Still, the ranks of ships making the crossing every day have dwindled since the war began.

Continued attacks on energy infrastructure, by both Israel and Iran, have raised concerns about longer-lasting damage to the world’s oil and gas supply. The group of oil-producing nations known as OPEC+, which includes Saudi Arabia, Iraq and Kuwait, said Sunday that “restoring damaged energy assets to full capacity is both costly and takes a long time.” Attacks on power and energy facilities continued in Iran and throughout the Gulf region Monday.

Gasoline prices continue to rise

U.S. gas prices rose again Monday, jumping to a national average of $4.12 a gallon, according to the AAA motor club. The increase has raised the cost for drivers 38% since the war began.

Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.

Diesel prices have increased even more quickly and stood at $5.62 Monday, up 49% since the start of the war.