Global oil prices have surged following heightened geopolitical tensions after US President Donald Trump confirmed the interception of an Iran-flagged cargo ship, triggering renewed instability in already volatile energy markets shaken by the Iran-Israel conflict.
Brent crude rose by 5.4% to $95.27 (£70.62) a barrel, while the US benchmark West Texas Intermediate climbed 5.9% to $88.79, reflecting sharp investor reactions to fresh disruptions in the Middle East.
The price jump reversed losses recorded on Friday, when markets briefly eased after Iran said the Strait of Hormuz would remain “completely open” to commercial vessels for the remainder of the ceasefire period.
However, sentiment shifted again over the weekend after Iran announced it was closing the strait and warned that any vessel approaching the waterway would be targeted. The Strait of Hormuz is a critical global energy chokepoint, with about 20% of the world’s oil and liquefied natural gas passing through it under normal conditions.
The renewed closure has intensified fears of prolonged supply disruptions, especially as tensions between Iran, the United States, and Israel continue to escalate following military action in late February.
The Strait remained closed on Sunday, after Iran’s Islamic Revolution Guard Corps (IRGC) said it was ending a temporary reopening, accusing the US of violating ceasefire terms through its naval blockade. Iran said it would keep the waterway closed until the blockade is lifted.
US President Donald Trump has maintained pressure on Tehran, stating that the naval blockade would continue until a deal is reached.
He also confirmed that US representatives would travel to Pakistan on Monday for negotiations, with Vice-President JD Vance expected to lead the delegation. However, Iran’s state media said Tehran had “no plans for now to participate” in the talks, although its official position remains unclear.
Market analysts say the volatility reflects the uncertainty surrounding diplomatic efforts.
“Oil markets continue to gyrate in response to oscillating social media posts by the US and Iran, rather than the realities on the ground,” said Saul Kavonic of MST Marquee, adding that “this is all part of negotiations, physically playing out in real time on the Strait of Hormuz.”
Investors are also showing signs of fatigue. “I think the market stopped believing the words, and will look more towards the actions,” said Shanti Kelemen of 7 Investment Management, pointing to the repeated “chopping and changing” in the situation.
The crisis has also weighed on global financial markets, with European stocks opening lower on Monday. The FTSE 100 fell 0.4%, while Germany’s Dax and France’s Cac 40 dropped more than 1%.
Asian markets, however, had earlier posted modest gains, reflecting uneven global reactions to the unfolding energy shock.
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