Oil prices continue to rise as Trump's deadline approaches

SadaNews - Oil prices have risen for the third consecutive day after U.S. President Donald Trump escalated his threats to destroy key Iranian infrastructure if his demands are not met by the deadline on Tuesday.

Brent crude traded near $111 a barrel after a 0.7% increase in the previous session, while West Texas Intermediate reached around $115 after closing at its highest level since June 2022.

Trump escalates against Iran

Trump said on Monday that talks with Iran "are going well," although he noted that reopening the Strait of Hormuz is a "top priority".

The U.S. president revealed the consequences Iran would face if it did not reach an agreement before the deadline at 8 PM Eastern Time on Tuesday.

He stated that the U.S. military could destroy "every bridge in Iran by midnight tomorrow," adding that power plants "will burn, explode, and will never be used again," which could violate the Geneva Agreements.

Iran has warned that it will respond to such strikes by escalating its attacks on energy infrastructure in the region, which could exacerbate the global fuel crisis and amplify the damage to the global economy.

Price scenarios between escalation and de-escalation

The war, which has entered its sixth week, has disrupted oil markets, causing a sharp supply shock.

Robert Rennie, head of commodity research at Westpac Banking Corp, said: "If Trump moves to the 'total destruction' phase and Iran follows up with 'harsher' and 'wider-ranging' attacks, we expect to see momentum pushing prices above $110 up to $120."

He added: "However, if Trump extends the deadline again, we will remain in the current range between $95 and $110 for now."

Increasing signs of supply shortage

As the war continues, other indicators of supply concerns in the near term are emerging.

The spot spread for West Texas Intermediate, which is the difference between the nearest two contracts, traded near $15.50 per barrel on Monday, a level close to the highest premium ever recorded.

This widening resulted from increasing expectations of dwindling U.S. supplies, with foreign buyers ramping up purchases of American crude.