Energy Markets on Alert: Iran threatens continued shutdown; Trump warns of “much harder” attacks
Iran’s Revolutionary Guards said on Tuesday they would not allow “one litre of oil” to be shipped from the Middle East if U.S. and “Israeli” attacks continue, while President Donald Trump warned that the U.S. would hit Iran much harder if it blocked exports from the energy-producing region.
This comes as oil prices briefly shot to their highest level since 2022 a day after Iran selected Ayatollah Mojtaba Khamenei to succeed his late father as Iran’s supreme leader. But prices later fell and U.S. stocks rose on hopes that the war may not last much longer, after Trump said it could be short-lived.
Hours later, he posted on social media: “If Iran does anything that stops the flow of Oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far.”
In an apparent response to Trump’s remarks published in Iranian state media, a spokesperson for the paramilitary Revolutionary Guard, Ali Mohammad Naini, said “Iran will determine when the war ends.”
Iran’s Foreign Minister Abbas Araqchi said Iran was unlikely to resume negotiations with the U.S., citing what he described as a “bitter experience” with past talks.
“After three rounds of negotiation, the American team in the negotiation said itself that we made a big progress. Still, they decided to attack us. So, I don’t think talking to the Americans anymore would be on our agenda anymore,” he said in an interview with PBS.
As the war has already effectively shut the Strait of Hormuz, tankers have been unable to sail for more than a week, forcing producers to halt pumping as storage facilities fill.
Saudi Arabia’s Aramco 2222.SE, the world’s top oil exporter, said on Tuesday that there would be “catastrophic consequences” for the world’s oil markets if the war continues to disrupt shipping in the Strait.
The disruption has not only upended the shipping and insurance sectors but also promises to have drastic domino effects on aviation, agriculture, automotive and other industries, Aramco CEO Amin Nasser told reporters on an earnings call.
Nasser noted global inventories of oil were at a five-year low and said the crisis will lead to drawdowns at a faster rate, adding that it was critical that shipping in the strait resumed.
“There would be catastrophic consequences for the world’s oil markets and the longer the disruption goes on, and the more drastic the consequences for the global economy,” he said.
