Oil prices jumped on Monday after Iran said it was suspending indirect talks with the United States and threatened to close the Strait of Hormuz, abruptly reversing the optimism that had pulled crude lower in recent sessions. West Texas Intermediate futures rose about 7% to around $94 a barrel, while Brent crude climbed roughly 6% to near $97.
The catalyst was a report from Iran’s semi-official Tasnim news agency that Tehran was halting communication with Washington through mediators in protest at Israel’s expanding military operations in Lebanon and Gaza, and that it would move to shut the strait. Around a fifth of the world’s seaborne oil passes through the waterway, making it the single most sensitive choke point in the global energy trade.
The move unwound a sharp slide in prices that had taken hold as markets bet on a deal to extend the ceasefire and reopen Gulf shipping. Crude had fallen heavily on that expectation, and the reversal underscored how tightly oil has become tethered to the day-to-day signals emerging from the negotiations.
Traders responded by rebuilding the risk premium that had been draining out of the market. Energy shares outperformed, while airlines and other fuel-sensitive sectors came under pressure, and the prospect of costlier crude revived concerns about a fresh leg of inflation just as several central banks had begun to sound more confident about the outlook.
Analysts cautioned that a full closure of Hormuz would be hard for Iran to maintain and would damage its own exports, suggesting much of the day’s move reflected the threat rather than an actual disruption to flows. Even so, the episode was a reminder of how much spare capacity and strategic reserves matter when the waterway is in question.
For oil-importing economies that have spent months stockpiling fuel against precisely this kind of shock, the surge was an unwelcome but not unanticipated test. Where prices settle from here will depend less on inventories than on whether Tehran follows through, and on how forcefully Washington and Gulf states respond.