Oil prices kept going up and down on Monday as people tried to make sense of the situation.
On one hand, there are growing threats between the US and Iran, especially around energy facilities. On the other hand, millions of barrels of Iranian oil are starting to flow again after the US temporarily eased sanctions.
Brent crude went up a bit, reaching $112.84 a barrel. US oil, known as West Texas Intermediate (WTI), also rose to $98.75. But earlier in the day, both had actually dropped by more than a dollar.
Right now, the price gap between Brent and WTI is over $13 a barrel — the biggest it’s been in years.
Experts say the market is nervous and reacting quickly to every new statement or threat. But in the bigger picture, what really matters is how much oil is still moving out of the Middle East.
Things heated up over the weekend. US President Donald Trump warned that he would “destroy” Iran’s power plants if Iran didn’t reopen the Strait of Hormuz within 48 hours. This came just a day after he had talked about possibly calming things down.
Iran quickly responded. A senior official warned that if their power plants were attacked, key energy sites across the Middle East could be badly damaged in return.
Analysts say this kind of back-and-forth only increases the risk — and usually pushes oil prices higher. Some believe the US is trying to pressure Iran hard, but that could backfire and lead to serious damage across the region.
The head of the International Energy Agency said the current crisis is extremely serious — even worse than the oil shocks of the 1970s.
The conflict has already hit major energy facilities in the Gulf. It has also almost stopped shipping through the Strait of Hormuz, a key route that carries about 20% of the world’s oil and gas.
Experts estimate that the region could be losing between 7 to 10 million barrels of oil per day because of the disruption.
Iraq is also feeling the pressure. It has declared force majeure on oilfields run by foreign companies, meaning operations can’t continue normally. Production in Basra has dropped sharply, from 3.3 million barrels per day to just 900,000.
At the same time, some countries are looking to take advantage of the situation. Indian refiners are planning to start buying Iranian oil again, and others in Asia may follow.
Some analysts think the US may actually want to calm things down and reopen the Strait of Hormuz. But it’s not that simple.
As long as Iran can strike back, any attack on its energy facilities could trigger more retaliation — and make the situation even worse.
