Oil benchmarks surged Monday, rising nearly 2% after peace negotiations between the U.S. and Iran stalled, heightening fears of a prolonged supply squeeze in global energy markets.
Brent crude rose $2.16 to $107.49 a barrel, while West Texas Intermediate climbed $1.77 to $96.17. Both reached their highest levels in approximately three weeks during early trading.
Supply remains critically tight as shipments through the Strait of Hormuz remain severely limited. The waterway typically handles 20% of global oil flows, leaving traders wary of further disruptions.
Diplomatic friction intensified after planned high-level meetings in Islamabad were canceled. This failure to reach a permanent settlement has effectively kept Iranian crude off the international market.
Market analysts estimate the ongoing conflict has removed nearly 1 billion barrels of supply over the past nine weeks, maintaining upward pressure on prices despite signs of demand destruction.
Investors are now pivoting toward upcoming interest rate decisions from the Federal Reserve and European Central Bank. These announcements are expected to influence the dollar and future energy demand.
While a new diplomatic proposal from Tehran provided a slight cooling effect late in the session, crude prices remain firmly supported above the $100 threshold amid the geopolitical deadlock.
