Oil Prices Surge as Iran–US Peace Talks Stall and Strait of Hormuz Tensions Disrupt Energy Markets

Global oil prices have climbed following renewed delays in planned second-round peace negotiations between the United States and Iran, as geopolitical tensions continue to strain global energy markets and raise concerns over supply disruptions.

Benchmark crude, Brent, increased by almost 2% to $107.26 (£79.25) per barrel, while US West Texas Intermediate (WTI) rose by around 1% to $95.40. The price movement comes after US President Donald Trump stated on Saturday that Washington had called off plans to dispatch a negotiating team to Pakistan for talks with Iranian representatives.

Energy markets remain under sustained pressure following the escalation of the Iran conflict, which has significantly impacted shipping through the Strait of Hormuz, a critical maritime route that has been effectively shut due to the ongoing hostilities. Approximately one-fifth of global crude oil and liquefied natural gas shipments typically pass through this chokepoint, making its disruption a major factor in global supply concerns.

Iranian Foreign Minister Seyed Abbas Araghchi said on Sunday that discussions were still taking place on “important discussions on bilateral matters and regional developments” with Oman, the neighbouring state along the Strait of Hormuz. He added in a social media post: “Our focus included ways to ensure safe transit that is to benefit all dear neighbors and the world. Our neighbors are our priority.”

Araghchi later travelled to St Petersburg on Monday for what Iranian state media described as a visit “with the aim of meeting and holding talks with Russian President Vladimir Putin,” according to Iran’s official news agency Irna.

Oil markets have reacted strongly over the course of the conflict, with Brent crude rising more than 10% since Trump announced last week an extension of a ceasefire period with Tehran, intended to give Iranian leadership time to develop what he described as a “unified proposal.”

Analysts warn that prolonged disruption to the Strait of Hormuz could have far-reaching consequences beyond energy prices. Portfolio manager and strategist Sophie Huynh of BNP Paribas told the BBC’s Today programme that the effects could extend into everyday goods, stating that the closure could influence prices “from ‘bin bags to medicine’.” She added: “I think we’re underestimating the extent of which products could be affected by the oil shortage. We’re not consuming crude, we’re consuming products.” Huynh further cautioned that if the closure persists for several weeks, the resulting supply chain disruption could become “really far reaching in terms of supply chain.”

Market behaviour suggests traders are currently adopting a cautious stance, with reduced sensitivity to headline developments. Economics lecturer Goh Jing Rong of Singapore Management University said investors are waiting for clearer confirmation of de-escalation, noting: “I think traders want concrete evidence rather than just a fragile and reversible ceasefire agreement.”

In his social media posts on Truth Social, Trump also commented on the cancelled diplomatic plans, writing on Saturday that there was “too much time wasted on travelling” and “too much work” involved in sending representatives to Islamabad. He further claimed that “there is tremendous infighting and confusion” within Iran’s leadership, adding: “Nobody knows who is in charge, including them,” and asserting: “Also, we have all the cards; they have none! If they want to talk, all they have to do is call!!!”

Despite geopolitical instability, Asian equity markets continued to strengthen. Japan’s Nikkei 225 rose by 1.7% on Monday, extending gains of nearly 14% over the past month. Meanwhile, South Korea’s KOSPI advanced by 2.5%, contributing to a more than 20% monthly increase.

Both Japanese and South Korean markets had initially experienced sharp declines at the onset of the conflict due to their heavy dependence on energy imports from Gulf states, though recent gains suggest investor sentiment has partially recovered even as risks in global energy supply chains remain elevated.

By fLEXI tEAM