Oil prices climbed more than 3.5% on Monday as peace efforts between the United States and Iran lost momentum. The failed push renewed market fears that Middle East tensions could keep global energy supplies under pressure.
Brent crude moved near $104 to $105 per barrel, while U.S. WTI futures rose above $98. Traders reacted quickly after President Donald Trump rejected Iran’s response to a U.S. ceasefire proposal.
The market had hoped for progress in talks. However, the latest exchange showed that both sides remain far apart. As a result, investors started pricing in a higher risk of supply disruptions.
Strait of Hormuz Remains Key Concern
The Strait of Hormuz continues to sit at the center of the oil market’s concerns. The route plays a major role in global crude oil shipments. Therefore, any restriction or threat near the waterway can shake energy markets.
Iran’s response, reportedly sent through Pakistani mediators, included several major demands:
- Sanctions relief
- Access to frozen assets
- War reparations
- Recognition of Iran’s control over the Strait of Hormuz
Washington’s offer focused on reopening the strait and limiting Iran’s nuclear program. That wide gap has made a quick deal unlikely.
Higher Oil Prices May Pressure Inflation
Analysts warned that the collapse in talks could trigger more price swings. Oil remains below earlier wartime highs, but the latest rally shows how sensitive traders remain to diplomatic signals.
Higher crude prices may also create problems for consumers and central banks. Fuel costs can affect transportation, food, and many household expenses. As a result, inflation may stay harder to control.
Unless both sides return to talks with clearer compromises, oil prices may remain volatile. Markets will likely keep watching every update from Washington, Tehran, and regional leaders.
