Oil prices swing wildly as Trump threatens Iran with power plant strikes over Hormuz

Oil prices swung sharply Monday after President Donald Trump issued a Tuesday deadline for Iran to reopen the Strait of Hormuz, threatening to strike the country's power plants and bridges if it refuses.

WTI crude shed roughly 2%, settling near $109.70 after earlier surging past $114. Brent, the global price benchmark, lost about 1% to trade around $108.30.

In a Sunday Truth Social post threatening to bomb Iran's power plants and bridges, Trump warned the country would be "living in Hell" over the closure; a second post containing only the words "Tuesday, 8:00 P.M. Eastern Time!" provided nothing further to clarify the threat. Iran pushed back through a senior official, who said reopening the waterway was contingent on the country receiving full compensation for war damages. Oman's foreign ministry said the country held talks with Iranian officials Sunday in an effort to restore transit through the blocked waterway.

Before the war, the strait served as the conduit for about a fifth of worldwide oil supply. By repeatedly targeting tankers, Iran has choked off that route in what analysts are calling an unprecedented disruption to global energy flows.

The U.S. national pump price hit $4.11 per gallon Sunday according to AAA, marking a nearly 38% increase since hostilities began. Diesel has climbed more than 40% from pre-war levels.

Eight OPEC+ members announced Sunday they would raise output by 206,000 barrels daily beginning in May, though analysts questioned how any additional supply could reach global markets while the strait remains blockaded. The eight countries in the coalition — Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria, and Oman — issued a warning that damaged energy infrastructure would be expensive and slow to fix, saying the repairs are "both costly and takes a long time, thereby affecting overall supply availability." Drone strikes on multiple Kuwait Petroleum Corporation sites caused serious damage, the state-owned company disclosed Sunday.

According to Bloomberg, the closure is still draining roughly 11 million barrels a day from global flows even after emergency stockpile releases and pipeline rerouting are credited — a deficit that, measured against consumption before the war, leaves markets nearly 9 million barrels short each day. TD Securities estimated that cumulative losses could approach one billion barrels before the month closes — roughly 600 million in crude and a further 350 million across refined fuels.

"With the conflict now expected to last at least into deep April, the barrel math becomes increasingly grim," Ryan McKay, senior commodity strategist at TD Securities, said in a note to clients.

Trump has made similar threats before. A previous two-day ultimatum issued March 21 was extended to April 6, and Trump's claims last week of direct U.S.-Iran talks were denied by Iranian officials, who said no such negotiations had taken place. The contradictions sent oil and stock markets swinging.

Bloomberg said a video call had been arranged for Monday among G7 finance and energy officials, their nations' central bank chiefs, and the heads of the IEA, IMF, and World Bank, with the war's economic and market fallout as the central agenda.