Oil prices moved higher on Monday after diplomatic efforts between the United States and Iran appeared to lose momentum, while limited shipments through the Strait of Hormuz continued to tighten global crude supplies.
Brent crude futures (CO1:COM) rose $2.20, or 2.1%, to $107.53 a barrel late in the session. U.S. West Texas Intermediate (CL1:COM) gained $2, or 2.1%, to $96.40 a barrel.
Traders have been closely monitoring the Strait of Hormuz, a critical chokepoint for global energy markets, where reduced flows have added to concerns about supply availability. Any sustained disruption in the waterway can quickly ripple through oil prices because a significant share of the world’s seaborne crude passes through the route.
Risk appetite was somewhat restrained in broader markets as investors weighed the economic fallout from continued tensions in the Middle East. S&P 500 futures (SPX) slipped 0.3%, a mild pullback after U.S. equities finished last week at a record closing high.
Currency markets showed a modest move toward the dollar. The euro edged down 0.15% to $1.1704, while the Japanese yen weakened slightly to 159.51 per dollar.
Although a ceasefire has halted full-scale fighting in the conflict that began two months ago with U.S.-Israeli strikes on Iran, uncertainty remains high because no deal has been reached to reopen the Strait of Hormuz. The strategic shipping route has been largely shut, helping drive energy prices sharply higher and raising concerns about supply disruptions.
Diplomatic efforts also appeared uncertain after U.S. President Donald Trump canceled a planned weekend trip to Islamabad by two envoys who had been expected to participate in talks. At the same time, Iran’s foreign minister has continued traveling among countries seeking to mediate the standoff.
"If they want to talk, they can come to us, or they can call us. You know, there is a telephone. We have nice, secure lines," Trump told "The Sunday Briefing" on Fox News.
"They know what has to be in the agreement. It's very simple: They cannot have a nuclear weapon, otherwise there's no reason to meet," Trump said.
Investors are now watching whether diplomacy can gain traction in the coming days, as prolonged shipping constraints and elevated oil prices could add to inflation pressures and complicate the outlook for global growth.
