Middle East conflict escalates, oil prices may rise further on Monday

Analysts on Sunday said that oil prices could rise further on Monday after threats from the U.S. and Iran to attack energy facilities, with prices closing near four-year highs before the weekend.

U.S. President Donald Trump threatened on Saturday that if Tehran does not fully reopen the Strait of Hormuz within 48 hours, he will “destroy” Iran’s power plants. This marked a significant escalation just one day after he discussed “wrapping up” the war, which has now entered its fourth week.

Iran warned on Sunday that if Trump carries out his threat, Iran will attack U.S.-related infrastructure, including energy and desalination facilities in the Gulf region.

On Friday, Brent May futures rose 3.26%, closing at $112.19 per barrel, the highest since July 2022.

IG Market Analyst Tony Sycamore said, “Trump’s threat now acts as a 48-hour uncertainty timer for the market. He said if the ultimatum is not withdrawn, oil prices will surge on Monday.”

“This clearly indicates an escalation, meaning higher oil prices,” said Amrita Sen, founder of Energy Aspects. “However, some mistakenly believe Iran might capitulate. Trump is trying to show he can escalate beyond this, and the outcome of such a move would be scorched earth for Gulf infrastructure.”

Iran has previously attacked ports and refineries in Saudi Arabia, Kuwait, Bahrain, the UAE, and Qatar in retaliation for attacks on its infrastructure. During the 22-day conflict so far, the closure of the Strait of Hormuz has caused a global supply loss of 4 days, approximately 440 million barrels.

So far, Tehran has not targeted large desalination plants in Saudi Arabia and the UAE, which supply water to millions.

The Atlantic Council warned that extensive damage to these facilities could make some Gulf cities uninhabitable within weeks, forcing large-scale evacuations and causing chain power outages.

Last week, Brent prices rose about 8.8%, while WTI prices declined approximately 0.4% compared to last Friday’s close. On Wednesday, the spread between WTI and Brent hit its widest in 11 years.

Fattah Birol, Executive Director of the International Energy Agency, said on Friday that restoring supplies in the Middle East Gulf could take up to six months.

According to Axios on Friday, the Trump administration is considering occupying or blockading Iran’s Hegra Island to pressure Iran into reopening the Strait of Hormuz.