Global oil prices climbed sharply on Monday after US President Donald Trump warned Iran that time was running out for negotiations to end the ongoing conflict in the Middle East.
Brent crude, the global oil benchmark, rose by 1.7 per cent to $111.13 per barrel, while US West Texas Intermediate crude gained 2.1 per cent to trade at $107.62.
The latest surge comes as tensions continue to escalate following Iran’s effective closure of the Strait of Hormuz — one of the world’s most critical shipping routes for oil and liquefied natural gas (LNG). The move was in retaliation for US and Israeli strikes on Iranian targets that began on February 28.
Roughly one-fifth of the world’s oil and LNG supplies normally pass through the narrow waterway.
In a strongly worded social media post, President Trump warned Tehran to move quickly toward a resolution.
“They better get moving, FAST, or there won’t be anything left of them,” Trump wrote. “TIME IS OF THE ESSENCE!”
Iranian media, however, reported that talks remain deadlocked, accusing Washington of failing to make meaningful concessions in response to Tehran’s latest proposals.
According to the semi-official Mehr news agency, the lack of compromise from the United States could lead to a complete breakdown in negotiations.
Trump’s latest remarks echo earlier warnings he made before a temporary ceasefire was announced in April. Last week, he described the truce as being on “massive life support” after rejecting Iran’s latest demands as “totally unacceptable”.
Reports from Axios indicate the US president is expected to meet top national security advisers on Tuesday to discuss possible military options regarding Iran.
The worsening conflict has also intensified fears over global inflation, pushing government borrowing costs higher across major economies.
In the United States, the benchmark 10-year Treasury yield climbed to 4.63 per cent on Monday — its highest level in more than a year — as investors increasingly anticipate further interest rate hikes.
Bond yields in Japan and Europe also moved sharply upward. In Japan, yields surged after reports suggested the government may issue additional debt to fund a supplementary budget aimed at cushioning the economic impact of the conflict.
The yield on Japan’s 30-year government bond hit a record 4.2 per cent, while the 10-year bond yield rose to 2.8 per cent, its highest level since 1996.
Eurozone borrowing costs also increased as financial markets reacted nervously to the growing uncertainty.
The developments come as finance ministers from the Group of Seven (G7) economies gather in Paris to discuss the deepening global energy crisis and wider economic risks.
European Central Bank President Christine Lagarde acknowledged growing concerns in financial markets when asked about the recent bond sell-off.
“I always worry, that’s my job,” she told reporters.
Analysts warn the situation could worsen significantly if the Strait of Hormuz remains closed for an extended period.
Claudio Galimberti, chief economist at Rystad Energy, described the outlook as increasingly alarming.
“This is a very dire situation and it’s going to get worse unless the strait is opened,” he told the BBC. “We are approaching a summer of pain.”
The spike in oil prices is already affecting businesses globally, particularly airlines preparing for the peak summer travel season.
Irish low-cost carrier Ryanair said the Middle East conflict had created major economic uncertainty and disrupted fuel markets.
“The conflict in the Middle East has created economic uncertainty and we still don’t know when the Strait of Hormuz will reopen,” the airline said while announcing its annual financial results.
Although Ryanair has locked in prices for 80 per cent of its future jet fuel needs, it said costs for the remaining portion had surged sharply due to the conflict.
The airline reported annual profits of €2.26 billion, up from €1.6 billion the previous year, with revenue rising 11 per cent to €15.5 billion.
However, the company cautioned that the outlook remains difficult to predict because of both the Iran conflict and the ongoing war in Ukraine.
Meanwhile, tensions in the Gulf region continue to spread beyond Iran and Israel.
On Sunday, authorities in the United Arab Emirates confirmed that a drone strike had sparked a fire near the Barakah Nuclear Power Plant in Abu Dhabi.
UAE officials described the incident as a “dangerous escalation”.
According to the country’s defence ministry, three drones entered UAE airspace from the western border direction. Two were intercepted, while the third struck an electrical generator outside the facility’s inner perimeter, causing a fire.
Authorities said there were no injuries and no impact on nuclear safety levels, while investigations into the source of the attack remain ongoing.