Oil prices jump 5% as Trump keeps Iran escalation option open

Oil prices jumped around 5% on Monday after US President Donald Trump said a “massive escalation” against Iran remained an option, deepening uncertainty over negotiations to end the conflict and fully reopen the Strait of Hormuz.

International benchmark Brent crude rose 5% to $87.7 per barrel as of 2005GMT, its highest level in nearly two weeks, while US benchmark West Texas Intermediate (WTI) climbed 5.1% to $82.2.

Brent extended its gains for a fourth consecutive trading session as markets assessed the prospects of further military action and continued disruption to energy shipments through the strategic waterway.

Asked whether a major escalation against Iran remained under consideration, Trump said Washington had the capability to pursue that option.

“Well, we have that certain ability if we want to do that,” he told reporters at the White House.

Trump also said Iran should pay compensation for damage caused over the past 50 years, rejecting Tehran’s demands for war compensation in negotiations.

While Trump claimed that the Strait of Hormuz was open and “100%” controlled by the US, he acknowledged that Iran could still attempt to disrupt maritime traffic.

Tehran has said Washington must lift its blockade before Iran agrees to fully reopen the waterway, through which a significant share of global oil and liquefied natural gas supplies passes.

Prices were also supported by reports of attacks on Saudi Arabia’s Jazan refinery and a tanker operated by Abu Dhabi National Oil Co. over the weekend.

Meanwhile, crude stocks in the US Strategic Petroleum Reserve fell below 300 million barrels to about 298.7 million last week, their lowest level since 1983.