Oil & Gas

Oil prices initially jumped more than 2% on Monday, driven by rising geopolitical tensions, before pulling back slightly. The surge was fueled by stalled U.S.-Iran diplomacy and ongoing disruptions in the Strait of Hormuz, which added a risk premium to crude markets. Brent and WTI both climbed significantly, while equity futures declined amid concerns that higher energy prices could push inflation upward again.

The rally extended beyond crude, with Murban and the OPEC basket also rising, alongside gains in gasoline and heating oil. This broader increase signaled that traders are increasingly worried about supply disruptions affecting multiple parts of the energy market, especially given the strategic importance of the Strait of Hormuz, a key route for global oil and LNG shipments.

Tensions escalated after planned peace talks between the U.S. and Iran collapsed, and President Donald Trump canceled a scheduled negotiation mission. At the same time, shipping constraints in the Strait continued to heighten fears of limited supply. The resulting spike in oil prices pressured financial markets, as investors reassessed the likelihood that persistently high energy costs could influence central bank policies, particularly the Federal Reserve’s stance on inflation.

Meanwhile, Iran pursued alternative diplomatic efforts, engaging with Russia and proposing a plan to reopen the Strait of Hormuz while delaying nuclear negotiations. The proposal aims to separate shipping security from the broader nuclear dispute, but it remains uncertain whether the U.S. will accept this approach. As the situation develops, the White House is evaluating its next steps, with continued pressure on Iranian oil exports seen as a key element of U.S. strategy.