Oil prices seesawed Monday as the next stage of the Iran war remained unclear — with President Trump threatening heavy attacks and Tehran rejecting a 45-day ceasefire.

Brent crude prices rose 0.9% to $109.48 and West Texas Intermediate jumped 1.2% to $112.86 after both benchmarks regained losses earlier in the morning.

National average gasoline prices – which typically lag behind energy supply shocks by a few weeks – continued to climb, hitting $4.12 a gallon. 

The US, Iran and regional mediators have been discussing a deal for a potential 45-day ceasefire that could lead to a permanent end to the war, Axios reported on Sunday night, giving a boost to oil and stock markets after Monday’s opening.

But oil futures rose and stocks posted modest gains after Tehran turned down the proposal and Trump repeated his promise to pummel Iran if it doesn’t meet his deadline of by 8 p.m. ET Tuesday to reopen the Strait of Hormuz – a vital maritime route for 20% of the world’s oil.

“The entire country can be taken out in one night, and that night might be tomorrow night,” the commander-in-chief said at a White House press conference.

Iran vowed “much more devastating and widespread” retaliation if Trump follows through with his threat to ramp up strikes.

The major US stock indexes clung to minor gains at the end of a turbulent session, with the Dow Jones Industrial Average gaining 165 points, or 0.4%, and the S&P 500 and Nasdaq up 0.4% and 0.5%, respectively.

“It’s clearly too early for market watchers to stop thinking about geopolitical risk,” Jeff Buchbinder of LPL Financial told Bloomberg News. “For now, we believe the best course of action for investors is to be patient.”

Trump said last Wednesday that the US would leave Iran in two to three weeks, but investors have been concerned that the exit could come without a deal to reopen the strait.

Iran’s effective blockade of the route has caused the worst-ever energy supply disruption – with an estimated 1 billion barrels to be lost by the end of the month, according to TD Securities. 

Source familiar with the talks acknowledged getting a deal before Trump’s deadline was a long shot, but cast it as a last chance to prevent a major escalation of the conflict.

Since the US and Israel launched air strikes on Iran on Feb. 28, the International Energy Agency has approved a record release of 400 million barrels of oil from its strategic reserves. Trump ordered the release of 172 million barrels from the US Strategic Petroleum Reserve.

But there are not enough reserves in the world to make up for the vast amounts of oil that typically traverse the strait, experts say.

Analysts have also warned that strikes on key energy facilities in the Middle East could keep oil prices elevated even if the war ends soon, since it will take significant time and money to repair damages. 

Economists have cautioned that energy shocks tend to ripple across consumer prices, reheating fears of inflation and interest-rate hikes – though Fed Chairman Jerome Powell has said there is no need to raise rates yet.