Oil prices jumped on Monday as the United States resumed strikes on Iran despite ongoing negotiations between the two countries.
Israeli troops were also reported to have moved into Lebanon over the weekend, while the US struck targets in Iran, fuelling fears that tensions in the Middle East could escalate rather than ease.
According to Oilprice.com, Brent crude leapt by more than seven per cent, rising from $91.12 to $97.52 per barrel after Iran’s state-affiliated media reported that Tehran was cutting off diplomatic channels with Washington and moving to fully block the strategic Strait of Hormuz.
The reported collapse in diplomacy shattered fragile market optimism, reversing earlier trading dynamics and sending energy markets into a tailspin.
As of Monday evening, WTI crude surged to $94.56 per barrel from about $87, while Brent crude climbed above $97.54 per barrel as investors reacted to the sharp escalation in geopolitical risks.
Iran’s state-affiliated Tasnim news agency reported that Iranian negotiators would immediately stop exchanging messages with the US through intermediaries.
The dramatic shift was reportedly a direct response to ongoing ceasefire violations, particularly Israel’s military operations against the Iran-backed Hezbollah militia in Lebanon.
“No dialogue will take place until Israel fully withdraws from occupied areas in Lebanon and stops all attacks in both Lebanon and Gaza,” Tasnim reported.
The report added that the “resistance front and Iran have resolved to completely block the Strait of Hormuz and activate other fronts, including the Bab al-Mandeb Strait, in order to punish the Zionists and their supporters.”
This comes as US President Donald Trump reportedly requested stronger language on Iran’s nuclear commitments and more explicit provisions governing the reopening of the Strait of Hormuz, indicating that negotiations are not nearing completion as suggested by Washington.
CNN reported that the president reviewed the draft agreement with advisers before sending it back for revisions, with discussions expected to continue for at least another week.
The latest proposal reportedly includes a 60-day cessation of hostilities, provisions to reopen the Strait of Hormuz, and a framework for future nuclear negotiations.
However, major sticking points remain, including the fate of Iran’s highly enriched uranium stockpile, the scope of sanctions relief, and the guarantees Tehran is demanding before signing a final agreement.
The Strait of Hormuz remains the most important energy chokepoint in the world, carrying roughly 20 per cent of global oil trade and a significant share of LNG exports from Gulf producers.
Any delay in securing unrestricted shipping through the waterway is likely to keep a geopolitical risk premium embedded in crude prices.
Over the weekend, Trump attempted to inject more optimism into the talks, saying on Truth Social that Iran “really wants to make a deal” while urging critics to allow negotiations to continue.
In a separate interview with Fox News, he reiterated that preventing Iran from obtaining a nuclear weapon remained his primary objective and warned that military options remained available if diplomacy failed.
Trump also said Iran had agreed to language preventing it from developing, acquiring, or purchasing a nuclear weapon, despite his request for revisions to nuclear-related provisions.
Iran publicly pushed back on Monday, with Foreign Ministry spokesman Esmaeil Baqaei saying there were currently no discussions taking place with Washington on the technical details of Iran’s nuclear programme, adding that ending the war remained Iran’s immediate priority.
At the same time, Iranian media reported that both sides continued to exchange revisions to the draft agreement, suggesting negotiations remained active despite conflicting public messages from the parties involved.
There are concerns that another surge in oil prices could trigger higher fuel prices globally.
