Oil Prices Set to Rise Further Amid US-Iran Tensions

Oil prices closed near a 4-year high on Friday, with Brent futures for May settling at $112.19 a barrel, the highest since July 2022. The escalation of tensions between the US and Iran has placed a 48-hour ticking time bomb of uncertainty over markets.

US President Donald Trump has given Iran a 48-hour ultimatum to reopen the Strait of Hormuz, threatening to obliterate Iran's power plants if Tehran does not comply. Iran has warned that it will attack US-linked infrastructure, including energy and desalination facilities in the Gulf, if Trump carries out his threat.

The closure of the Strait of Hormuz has resulted in a loss of 440 million barrels of global supply over the past 22 days. Restoring supplies from the Middle East Gulf could take up to six months, according to the International Energy Agency.

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Brent gained about 8.8% last week, while the front-month WTI settled down around 0.4% compared with last Friday's close. The Trump administration is considering plans to occupy or blockade Iran's Kharg Island to pressure Iran to reopen the Strait of Hormuz.

The escalation of tensions has raised concerns about the potential for large-scale damage to desalination plants in Saudi and the UAE, which could make some cities in the Gulf uninhabitable within weeks.