Oil Prices Rise as Iran Threatens to Close Bab al-Mandeb Strait as Trump Deadline Nears

Oil prices have again climbed today, with Iran threatening to close the Bab al-Mandeb Strait if Trump escalates tensions in the Middle East once the 8 P.M. deadline elapses. Iran has also reportedly cut off communications with the U.S. as tensions continue to build ahead of the deadline today.

Oil Prices Rise as Potential Bab al-Mandeb Strait Closure Threatens New Supply Shock

WTI oil futures have climbed above $117 today, up over 4%, reaching their highest level since 2022. Brent crude oil futures are also up today, rising above $110 amid Iran’s threat to close the Bab al-Mandeb Strait, another major oil chokepoint that accounts for up to 12% of global seaborne-traded oil.

According to a Reuters report, a senior Iranian source warned that “if the situation gets out of control, Iran’s allies will also close the Bab El-Mandeb Strait.” It is worth noting that Iran-backed Yemen’s Houthis have joined the war and could disrupt traffic in the Red Sea, especially in the Bab El-Mandeb Strait.

The threat to close the Bab El-Mandeb Strait comes as U.S. President Donald Trump’s 8 P.M. E.T. deadline nears. The source has also said that Iran has warned the U.S. that attacks on its power plants will lead to retaliatory strikes, which will put the entire region and Saudi Arabia into “complete darkness.”

Iran has also said that it wouldn’t reopen the Strait of Hormuz in exchange for empty promises from the U.S. despite Trump’s threats. As CoinGape earlier reported today, U.S. air strikes on Iran are now looking likely as the U.S. and Iran have rejected peace deals.

It is worth noting that the rising oil prices are also putting pressure on the crypto market as concerns of inflationary pressures mount. The total crypto market cap is down almost 2% today, dropping to $2.3 trillion.

As CoinGape reported, Bitcoin fell sharply after Iran rejected a temporary ceasefire. At the same time, the U.S. carried out airstrikes on Iran’s Kharg Island earlier today, likely as a warning as Trump’s deadline nears.

Iran Reportedly Cuts Off Direct Talks With The U.S.

Oil prices are also up today as Iran has cut off direct talks with the U.S., according to a WSJ report. This follows Trump’s threat today to destroy Iran’s “whole civilization” as his deadline approaches, with a peace deal in place.

The President had said in a Truth Social post that a whole civilization will die tonight and that even though he doesn’t want it to happen, it probably will. Meanwhile, the WSJ report also revealed that talks with ceasefire mediators continue despite Iran cutting off direct talks.

Middle East officials told WSJ that Iran’s move to cut direct talks has temporarily complicated efforts to reach a peace deal ahead of Trump’s deadline. This marks another negative for crypto prices, as traders continue to price in an escalation in the U.S.-Iran war.

However, it is worth noting that the Iranian media, Tehran Times, reported that diplomatic channels with the U.S. are not closed. This signals that there is still hope of a peace deal before the deadline elapses.