Tensions in the Middle East have tightened again, prompting a rapid shift in energy markets towards safe-haven demand. Following Iran's suspension of negotiations and document exchanges with the United States through international mediators, the market reassessed supply risks around the Strait of Hormuz, leading to a significant rise in international oil prices on Monday.
Brent crude oil prices approach $100
Reports indicate that Brent crude futures rose more than 6%, briefly reaching around $97 per barrel; West Texas Intermediate (WTI) crude oil rose more than 7%, surpassing $94 per barrel. Market reactions focused on a core concern: if the situation in the Middle East continues to deteriorate, global oil transportation could be directly impacted.
Iranian semi-official media outlet Tasnim reported that Tehran's negotiating team has suspended contact with the United States. This change is believed to be related to Israel's escalating military operations in Lebanon. Iran has also accused Washington of sending conflicting signals and delaying the process during negotiations.
US President Trump stated that he was unaware of Iran's decision before the news was made public. He told NBC News that this move does not necessarily mean an immediate escalation of the conflict, and that the US will maintain its existing containment strategy rather than immediately expanding military operations.
Risks in the Strait of Hormuz are escalating.
The immediate trigger for this round of oil price increases was the market's renewed focus on the Strait of Hormuz. This waterway has long carried about one-fifth of the world's crude oil shipments, and whenever there is an expectation of potential restrictions, the oil market typically quickly prices in a higher risk premium.
Tasnim also mentioned that Iran might consider a complete closure of the Strait of Hormuz and could potentially create disturbances around the Bab el-Mandeb Strait. Although Iranian officials have not officially confirmed these arrangements, traders have already begun to factor in the possibility of potential supply disruptions.
For the energy market, the impact of such news often depends not on whether the measures have been implemented, but on whether expectations of transportation security have been shattered. Crude oil futures prices typically rise initially when major shipping routes face uncertainty.
Military action exacerbates market volatility
Diplomatic progress stalled while regional military tensions continued to escalate. The report noted that US and Iranian forces continued to exchange fire over the weekend into Monday, while Israel expanded its operations in Lebanon and launched a new round of strikes against Hezbollah-controlled areas near Beirut.
Israeli Prime Minister Benjamin Netanyahu has reportedly ordered further action. If the conflict continues to spill over, market concerns about Middle Eastern supply chains could widen further, and oil prices will continue to be driven by geopolitical news.
In the short term, traders are focused on two key factors: whether US-Iran talks have resumed and whether there are clearer signals of restrictions in the Strait of Hormuz. If diplomatic channels reopen, recent gains may be partially reversed; if the situation continues to deteriorate, oil prices may remain high for an extended period.
