Oil Prices Remain Near Two-Year High Amid Escalating Tensions Over Trump's Energy Policies

US Oil Prices Surge Amid Escalating Tensions with Iran

The US oil market remained volatile on Monday as President Donald Trump intensified his threats against Iran, pushing prices near their highest close since June 2022. West Texas Intermediate (WTI) traded near $113 a barrel, marking a 0.8% increase from the previous day, while Brent settled just below $110.

The escalating tensions between the US and Iran have sent shockwaves through the global energy market, with the war in the Gulf now entering its sixth week. Trump's comments on Monday, in which he laid out the consequences of Iran not meeting his demands by a Tuesday deadline, have heightened concerns about a potential military conflict. The US president stated that the US military could destroy every bridge in Iran by 12 o'clock on Tuesday night, and that power plants would be rendered "burning, exploding and never to be used again," which would be a breach of the Geneva Conventions.

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Iran has warned that it would respond to any military strikes by ramping up its own attacks on energy infrastructure in the Gulf, which could exacerbate the global fuel squeeze and amplify damage to the world economy. The US oil market is already experiencing a severe supply shock, with WTI's prompt spread trading near $15.50 a barrel on Monday, close to the biggest premium on record. This widening is attributed to firming expectations of tighter US supplies as overseas buyers rush to purchase American crude.

As the war grinds on, oil and gas analysts are warning of potential consequences. "We're not backing off previous statements," said Carl Larry, an oil and gas analyst at Enverus. "Think we're getting to an end, but that might not be the best if it culminates in military actions."