Oil markets on edge as Trump’s Iran deadline raises escalation risks

Oil prices started the week firm but relatively stable in early Asian trading on Monday, holding near multi-year highs despite intensifying geopolitical tensions between the United States and Iran.

At the time of writing, WTI crude was trading at $98.61, up 0.39%, while Brent crude edged slightly lower by 0.24% to $111.90 per barrel. Despite limited price movement, market sentiment remains highly tense, with traders preparing for significant volatility.

Over the weekend, US President Donald Trump issued a strong ultimatum, warning that the United States could strike Iran’s power infrastructure within 48 hours unless the Strait of Hormuz is fully reopened. In response, Iran warned that any attack on its energy assets would trigger retaliation targeting critical infrastructure, energy facilities, and oil installations across the region. Iranian officials also indicated that financial entities supporting US military actions could be considered legitimate targets.

The deadline for this ultimatum, falling late Monday US time, is expected to act as a key trigger for market volatility. The situation has already escalated, with reports of intensified airstrikes and ongoing military activity across the region following continued hostilities over the weekend.

This development has heightened fears that the conflict could expand beyond military targets into broader attacks on economic and civilian infrastructure. Reflecting these concerns, senior energy executives have begun altering plans, with key industry leaders canceling or adjusting participation in major international energy events.

In parallel, global institutions are preparing contingency measures. The International Energy Agency has indicated readiness to coordinate the release of emergency oil stocks if required, while emphasizing that reopening the Strait of Hormuz remains the most critical step toward stabilizing markets.

The uncertainty has also impacted broader financial markets, with equities in Asia opening lower as investors shift toward a risk-off stance amid escalating tensions.

For oil markets, the ultimatum has introduced a clear timeline for potential escalation. The possibility of direct US strikes on Iranian energy infrastructure—and the likelihood of retaliatory actions—poses a significant threat to regional energy flows, keeping markets highly sensitive and volatile in the near term.

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