Global oil prices climbed sharply on Monday after Iran suspended indirect peace negotiations with the United States, raising fresh concerns about instability in the Middle East and the future of global energy supplies.
Brent crude and U.S. West Texas Intermediate both surged by around seven per cent after Iranian media reported that Tehran had halted talks being conducted through international mediators.
The move followed a weekend of renewed military exchanges between the United States and Iran.
Tehran has also insisted that any future agreement must address Israel’s expanding military operations in Lebanon, adding another layer of complexity to already fragile diplomatic efforts.
Iran’s Tasnim news agency said the suspension was triggered by the collapse of ceasefire arrangements and the continued escalation of fighting in Lebanon.
Market analysts said the development significantly increased the risk of a fresh conflict in the region, sending traders scrambling back into the oil market.
“Hopes for progress in US-Iran negotiations have faded rapidly,” said Chris Beauchamp, Chief Market Analyst at IG. “Combined with the exchange of strikes over the weekend, the possibility of renewed hostilities has increased, and that’s immediately reflected in oil prices.”
Energy markets remain particularly sensitive because of disruptions around the Strait of Hormuz, a vital shipping route through which roughly 20 per cent of global oil and liquefied natural gas supplies normally pass.
Although a ceasefire has largely held since April, shipping traffic through the waterway remains limited, while negotiations aimed at restoring normal flows have stalled.
According to analysts, global oil inventories are already under pressure, and expectations that supplies would return to normal by June now appear increasingly unlikely.
“No reopening is currently in sight, and every passing day brings markets closer to a supply crunch,” Beauchamp added.
The sharp rise in oil prices dampened investor enthusiasm in global equity markets, particularly after weeks of strong gains driven by artificial intelligence-related stocks.
Wall Street opened cautiously as higher energy costs raised concerns about inflation and economic growth.
However, technology shares provided some support, with Nvidia climbing more than four per cent after unveiling a new generation of AI-focused laptop chips during an event in Taiwan.
The announcement boosted sentiment across Asian technology markets. South Korea’s benchmark index gained more than four per cent, while Samsung Electronics surged over nine per cent and chipmaker SK Hynix advanced more than two per cent.
“Investors remain heavily focused on the AI boom,” said market analyst Stephen Innes.
Nevertheless, analysts warned that rising energy prices could undermine recent gains in global markets by fueling inflation and increasing pressure on consumers and businesses.
Across Europe, major stock markets closed lower, while the U.S. dollar strengthened against several major currencies.
In corporate news, shares of British low-cost airline EasyJet jumped more than nine per cent after the company dismissed reports of a potential takeover by U.S.-based private equity firm Castlelake as opportunistic.
Market Snapshot
- Brent Crude: Up 6.6% to $97.15 per barrel
- WTI Crude: Up 7.6% to $94.01 per barrel
- Dow Jones: Down 0.2% to 50,921.47
- S&P 500: Up 0.1% to 7,587.29
- Nasdaq Composite: Up 0.3% to 27,053.21
- FTSE 100: Down 0.7% to 10,338.95
- CAC 40: Down 0.5% to 8,146.59
- DAX: Down 0.4% to 25,003.04
- Hang Seng: Up 1.1% to 25,452.47
- Nikkei 225: Up 1.0% to 67,020.75
- Shanghai Composite: Up 0.4% to 4,084.46
- With diplomatic efforts faltering and tensions once again rising in the Middle East, investors are closely watching developments that could determine the direction of oil prices and global markets in the weeks ahead.
