Oil prices rose Monday after the United States and Iran threatened fresh attacks on energy facilities in the Middle East, including power plants, signaling that the conflict may yet escalate.

As the war entered its fourth week, the International Energy Agency (IEA) also said Monday that the reduction of global oil supply from the closure of the Strait of Hormuz was larger than the loss caused by the oil shocks of the 1970s.

Brent crude, the global oil benchmark, gained 1% to trade at $113 a barrel. WTI, the US benchmark, rose 0.8% to $99 a barrel.

On Saturday, US President Donald Trump said the United States would “obliterate” Iran’s power plants if Tehran did not reopen the Strait of Hormuz by Monday evening. His comments came barely a day after he talked about “winding down” the war.

Iran’s Islamic Revolutionary Guard Corps said it would respond in kind to any attacks on its power plants and also keep the Strait of Hormuz closed indefinitely.

“If you strike electricity, we will strike electricity,” the IRGC said in a statement published by the semi-official Fars news agency Monday. Israeli energy and communications infrastructure and power plants of countries in the region that host US military bases would also be targeted, Iran said.

Iran’s Parliamentary Speaker Mohammed Baqer Qalibaf wrote on X Sunday that, if Trump made good on his threat, critical infrastructure and oil facilities in the Middle East would be considered “legitimate targets” and would be destroyed.

At least 44 energy assets in the region have been severely or very severely damaged across nine countries, according to IEA executive director, Fatih Birol.

The energy shock as a result of the war is worse than the two consecutive oil crises in 1973 and 1979, in which the world lost about 10 million barrels of oil per day, Birol told the National Press Club of Australia Monday. The loss of natural gas supply, meanwhile, outstrips the 2022 energy crisis linked to Russia’s invasion of Ukraine, he said.

“And not only oil and gas, some of the vital arteries of the global economy, such as petrochemical, such as fertilizers, such as sulfur, such as helium, their trade is all interrupted, which would have serious consequences for the global economy,” Birol added.

“The single most important solution to this problem is opening up the Hormuz trade.”

Birol said the agency was talking with countries including Canada and Mexico about increasing the production of crude and oil products. “We have (oil) stocks and we are incentivizing many countries with refineries to move faster than they normally do,” Birol said.

IEA member countries agreed on March 11 to release a record 400 million barrels of oil from strategic stockpiles to ease a global supply crunch and put a cap on price increases. Birol said Monday that the organization was consulting with governments around the world on releasing more oil if necessary.

“If needed, we can put more oil in the markets, both crude oil and products,” he said. “Our stock release will help to comfort the markets, but this is not the solution. It will only help to reduce the pain and the economy.”

Separately, the Trump administration temporarily lifted sanctions on Iranian oil at sea Friday, allowing the sale of 140 million barrels of oil sitting on tankers – enough to satisfy global demand for roughly a day and a half, according to the US Energy Information Administration.

Stock markets sold off sharply Monday. South Korea’s Kospi tumbled 6.5%, with Japan’s Nikkei closing down 3.5% and Hong Kong’s Hang Seng sliding 3.5%. In Europe, equity markets in London, Frankfurt and Paris were trading around 2% lower in the morning. US futures also pointed to a weaker open.

“The war is entering a new phase of escalation and (stock) markets are finally starting to wake up to the gravity of the potential for long-term impact on energy markets,” Neil Wilson, a strategist at investment platform Saxo, wrote in a note Monday. “We are entering a new and very dangerous phase for financial markets.”

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