Trump Issues Ultimatum as Strait of Hormuz Crisis Escalates
President Donald Trump issued a 48-hour ultimatum to Iran on Saturday, threatening to strike Iranian power plants if the Strait of Hormuz is not reopened to all vessel traffic. The escalating tensions have sent shockwaves through global markets, with oil prices surging and stock markets declining amid fears of a protracted conflict.
Trump’s Threat and Iran’s Response
In a post on Truth Social, Trump warned that the U.S. Would “hit and obliterate” Iranian power plants if Iran doesn’t “FULLY OPEN, WITHOUT THREAT, the Strait of Hormuz” within 48 hours. Fox News and The Independent both reported on the ultimatum.
Iran quickly responded with threats of retaliation, vowing to target U.S. Energy and desalination infrastructure in the region if its power plants are attacked. The Islamic Revolutionary Guard Corps (IRGC) stated that if the U.S. Strikes, the Strait of Hormuz would remain closed until Iranian power plants are rebuilt and companies with U.S. Shares would be “completely destroyed.”
Global Economic Impact
Traffic through the Strait of Hormuz, a critical waterway for global oil and gas transport supplying roughly one-fifth of the world’s crude oil, has been largely limited since early March following the start of the conflict. This disruption has led to a significant increase in oil prices, surpassing $100 a barrel multiple times in recent weeks, and diesel prices exceeding $5 a gallon.
The crisis is already impacting global financial markets. European stocks slumped, with the Stoxx Europe 600 Index on course for a correction from its February record high. The Stoxx Europe 600 was down 1.5 per cent by 8.21am in London, more than 11 per cent below its February peak. Asian markets also experienced declines, with Japan’s Nikkei falling 3.8 per cent and South Korea’s market shedding 5.2 per cent.
International Response and Concerns
Trump has criticized NATO allies for not assisting in securing the waterway, branding them “cowardly.” But, he also suggested the strait is of little strategic importance to the U.S. And claimed it would eventually “open itself.”
The International Energy Agency (IEA) is consulting with governments in Asia and Europe on the potential release of more stockpiled oil “if necessary.” The IEA’s executive director, Fatih Birol, described the crisis as “very severe” and worse than previous oil shocks, including the impact of the Russia-Ukraine war on gas.
The UK is set to convene an emergency Cobra meeting to discuss the situation, following a call between Prime Minister Keir Starmer and President Trump. Concerns are rising that much of Europe could be within range of Iranian weapons.
Additional Developments
Amidst the tensions in the Strait of Hormuz, Ukraine has been conducting drone attacks on Russian oil facilities, targeting key export hubs like Primorsk.
An antisemitic arson attack on four ambulances belonging to a Jewish community ambulance service in London is being investigated as a hate crime.
Governments are considering tax rebates and fuel allowances to mitigate the impact of rising fuel prices, but the duration of these measures remains uncertain.