Oil Hits $116 — Brent Up 60% in a Month as Trump Escalates Pressure

Quick Answer: Brent crude rose more than 3% to top $116 a barrel on Monday as Donald Trump floated the idea of seizing Iran’s oil and the conflict entered its fifth week with no resolution in sight. The benchmark is up more than 60% in March alone — on track for its steepest monthly rise on record — as the Strait of Hormuz remains effectively closed and the IEA warns of the largest supply disruption in the history of global oil markets.

Why Markets Are Repricing Fast

The move on Monday morning was not triggered by a single event but by a convergence of signals that markets are increasingly reading as evidence of a war that will not end quickly. Trump told the Financial Times on Sunday that his “preference would be to take the oil” — floating the idea of seizing Kharg Island, the terminal through which roughly 90% of Iran’s crude exports pass. He likened it to the US military operation in Venezuela earlier this year. The Pentagon, meanwhile, is reported to be preparing for weeks of potential ground conflict, with around 3,500 troops from the 82nd Airborne Division already ordered to support the war effort.

Iran’s response was equally uncompromising. The speaker of Iran’s parliament warned that Tehran was waiting for US ground troops to arrive so it could “set them on fire” and “punish” their regional allies. Tehran has flatly rejected Trump’s 15-point ceasefire plan and proposed its own terms, including war reparations and recognition of Iran’s right to control the strait — terms Washington has shown no sign of accepting.

The Escalation Broadens

The weekend brought two further developments that added to the pressure on oil. Yemen’s Houthi forces launched missiles at Israel for the first time in the conflict, opening a new front that market participants had not fully priced in. And Brent’s record monthly surge — more than 55% in March alone — is now pushing through into the real economy. As the oil shock moves from theoretical to physical reality across global markets, oil industry executives are warning that the supply disruption is working its way through loading cycles that take three to four weeks to manifest in European prices. Greg Newman, CEO of Onyx Capital Group, told Al Jazeera that Europe was “only beginning to feel the true fallout of the turmoil.”

That assessment aligns with the broader picture now emerging. The IEA has characterised the conflict’s impact as the largest supply disruption in the history of the global oil market — cutting global supply by approximately 8 million barrels per day, driven by the near-closure of the Strait of Hormuz through which 20 million barrels normally flow daily. European gas storage levels, already at historically low levels of around 30% capacity following a harsh winter, have added a second pressure point. Dutch TTF gas benchmarks have nearly doubled to over €60/MWh since the conflict began.

Markets Are Pricing in the Worst

Ed Yardeni, president of Yardeni Research, said global equities were beginning to reflect a scenario of higher-for-longer oil prices and interest rates as the risk of a prolonged conflict grows. David Roche, strategist at Quantum Strategy, said markets were increasingly pricing in the possibility of US boots on the ground and a move to seize Kharg Island — a step that would choke off Iran’s dollar revenues but risk triggering full-scale escalation that could spread far beyond the strait.

Trump’s mixed signals are compounding the uncertainty rather than resolving it. He told reporters aboard Air Force One that he sees a deal coming, that negotiations are progressing through Pakistani mediation, and that he has authorised more Pakistan-flagged ships through the strait. Hours later he was telling the FT he wants to take Iran’s oil infrastructure. As Trump’s oil price gambit continues to fail to convince markets, the credibility cost of contradictory signals is measurable in basis points and barrel prices.

What Comes Next

The April 6 deadline — Trump’s extended ultimatum threatening to obliterate Iran’s energy infrastructure if Tehran does not relinquish control of the strait — is now the single most important date on the energy market calendar. If it passes without resolution, the pressure on Brent to test and potentially breach the $119 high of March 19 becomes substantial. If Trump extends again, markets will struggle to price the signal coherently.

As the war enters its fifth week with stagflation fears surging and European markets pricing in a prolonged shock, the ECB has already postponed planned rate reductions and raised its 2026 inflation forecast. UK inflation is expected to breach 5%. Germany and Italy face recession risk if the blockade persists through the summer refill season. The forgotten Saudi pipeline that now carries critical alternative supply is running at capacity, but cannot offset what the strait normally carries.

The uncomfortable conclusion markets are reaching is the same one analysts have been reaching for weeks: this is a problem that cannot be solved by economic policy. Only the battlefield, or the negotiating table, can close it.