Crude oil prices saw an increase on Sunday, following a warning from Tehran against any US ground invasion, even as President Donald Trump announced on Friday that negotiations were set to continue in efforts to conclude the conflict.
The global standard, Brent crude, advanced by 2.47% to reach $107.92, while US crude recorded a 2.94% jump, climbing to $102.57.
On Sunday, Iran’s parliament speaker declared that the nation’s military forces were “awaiting” American troops. This declaration came after Trump had stated on Friday that “discussions are ongoing” and had extended the deadline for his demand for Iran to reopen the crucial Strait of Hormuz.
Further complicating regional oil shipments is the Iran-supported Houthi rebel group from Yemen, which carried out strikes against Israel on Saturday. This group poses a risk of potentially shutting down the Bab al-Mandab Strait, a vital maritime chokepoint connecting the Red Sea to international shipping routes.
Diplomatic efforts are also underway with foreign ministers from Pakistan, Saudi Arabia, Egypt, and Turkey collaborating to de-escalate the conflict. Pakistan’s Foreign Minister Ishaq Dar described Sunday’s meeting as “very productive,” adding that Pakistan intends to facilitate negotiations between the US and Iran “in the coming days.”
The conflict has led to the most significant oil supply disruption in history, primarily due to the closure of the strait, through which 20% of global oil traverses. Attacks on oil and gas infrastructure have also contributed to elevated gas prices. In the US, consumers are directly feeling the economic impact, with the average price of a gallon of gas reaching $3.98 on Sunday.
According to Bob McNally, president of Rapidan Energy, who spoke to CNN on Sunday, smaller nations, particularly those in Asia, will bear the brunt of the crisis, though the increase in oil prices will trigger widespread repercussions throughout the global economy. He suggested that, in a worst-case scenario, a recession could eventually curb the skyrocketing oil prices.
He stated, “When economic growth is hampered, it’s a harsh but effective method of reducing oil demand, which then serves to cap prices.”
Experts caution that a reduction in gas prices post-war will not be immediate. The speed of recovery will largely depend on the reopening of the Strait of Hormuz and the successful repair of damaged surrounding infrastructure, such as Qatar’s Ras Laffan — the world’s largest gas production facility — which was targeted by Iran in mid-March.
Stock futures also experienced a downturn on Sunday, with Dow futures declining by 0.53%, or 241 points. S&P 500 futures saw a 0.46% drop, and Nasdaq futures decreased by 0.48%.