LONDON, April 7 (Reuters) – Oil prices increased on Tuesday as the deadline set by U.S. President Donald Trump approached for Iran to reopen the Strait of Hormuz, or face potential attacks on its power plants and other...
LONDON, April 7 (Reuters) – Oil prices increased on Tuesday as the deadline set by U.S. President Donald Trump approached for Iran to reopen the Strait of Hormuz, or face potential attacks on its power plants and other infrastructure.
Brent crude oil futures rose by $1.39, or 1.27%, reaching $111.16 a barrel by 1209 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude climbed to nearly a four-week high at $116 a barrel, marking an increase of $3.58 or 3.18%.
Usually, WTI is priced lower than Brent, but the current situation has reversed as buyers are willing to pay more for oil that can be delivered sooner. The WTI contract in play is for May delivery, while Brent is set for June.
According to Saxo Bank analyst Ole Hansen, "The apparent shift in value is really just how the market is responding to immediate supply concerns."
Trump has given Iran until 8 p.m. Washington time (midnight GMT) to reopen the Strait of Hormuz, where about 20% of the world’s oil supply is typically transported. Iranian forces effectively closed the strait after U.S. and Israeli attacks began on February 28.
If Iran does not comply, Trump warned that "every bridge in Iran will be decimated" by midnight EDT (0400 GMT) on Wednesday, and "every power plant in Iran will be out of business, burning, exploding, and will never be used again."
On Tuesday, strikes on Iran increased, targeting railway and road bridges, an airport, a petrochemical plant, and power lines, according to reports from Iranian media.
In response to a U.S. ceasefire proposal through Pakistan as a mediator, Iran rejected it and insisted that a permanent end to the conflict is necessary, resisting pressures to reopen the strait.