U.S.-Iranian flare up extends to oil markets

July 23 (UPI) -- Geopolitical tensions escalated late Sunday when the U.S. president urged Iran to be cautious in a tit-for-tat exchange that reached deep into oil markets.

In a statement posted from his Twitter account, U.S. President Donald Trump warned Iran against taking a belligerent tone against the United States.

"Never, ever threaten the United States again, or you will suffer consequences the likes of which few throughout history have ever suffered before," his message, posted around 11 p.m. EDT, read.

The heated exchange was an apparent response to messages from Iranian leaders. Iranian President Hassan Rouhani during the weekend said peace was possible between Washington and Tehran, but warned that war with Iran would be "the mother of all wars."

"We'll definitely defeat the United States," he said.

The tensions were supporting crude oil prices overnight. The price for Brent crude oil, the global benchmark, was up about a half percent as of 5:20 a.m. EDT.

On Saturday, Supreme Leader Ali Khamenei backed calls from Rouhani to block oil shipments through the Straits of Hormuz if sanctions choke off Iranian oil.

"The duty of the Ministry of Foreign Affairs is to strictly pursue stances taken by the president," the ruling cleric stated.

The amount of oil flowing through the Strait of Hormuz represents about 20 percent of total global exports. Iran's president said in early July that if Iran can't export its own oil through the strait, no other country should be able to either.

The United States in May pulled out of the Joint Comprehensive Plan of Action, setting a clock ticking on unilateral sanctions on Iran. By November, U.S. sanctions snap back on Iran's oil sector, isolating one of the top producers in the Organization of Petroleum Exporting Countries.

Speaking Sunday, Rouhani said his government was still working with the remaining JCPOA signatories to salvage the agreement. Trump's decision in May to leave the agreement shows that it's Trump's government that's isolated, the Iranian president said.

"The isolated U.S. mustn't be [allowed] to gain power again," he said.

Pending sanctions against Iran were in part behind a mid-summer surge in crude oil prices. The looming loss of Iranian oil, security concerns in Libya and chronic shortages from Venezuela has added to concerns about the lack of spare capacity on the market. OPEC members in June decided to ease compliance with an agreement to control production in order to offset supply-side concerns, though the implied increase in oil output might not be enough to offset expected shortages.

Trump has called on Saudi Arabia to add more oil to the market to counter the supply-side pressures.