Oil Prices Surge as US-Iran Tensions Escalate
Oil prices jumped sharply in early Asian trading on Monday after the United States announced it had seized an Iranian cargo ship. At the same time, Iran reclosed the Strait of Hormuz, reversing a brief reopening over the weekend and reigniting supply concerns.
Brent crude surged as much as 7% to $97.50 per barrel, before easing slightly to $95.14 per barrel.
US Seizes Iranian Vessel, Tehran Responds
U.S. President Donald Trump stated that American forces had intercepted and seized an Iranian-flagged vessel attempting to breach a naval blockade.
Iran strongly condemned the action and threatened retaliation. The development came just hours after Tehran had reopened the Strait of Hormuz, only to shut it again within 24 hours. Oil prices had previously dropped over 9% on Friday following the initial reopening announcement.
Reports also indicated that Iranian forces fired on multiple ships attempting to pass through the key waterway over the weekend.
Strait of Hormuz Disruption Drives Market Fears
The renewed closure of the Strait of Hormuz—responsible for transporting roughly 20% of global oil supply—has heightened concerns about prolonged disruptions in energy markets.
With the U.S.-Iran conflict now entering its eighth consecutive week, recent developments suggest limited prospects for immediate de-escalation. As a result, oil prices are expected to remain supported in the near term.
Analysts warn that markets may have underestimated how long it would take for energy flows to normalize, with the situation likely to remain volatile.
Oil Market Outlook: Volatility and Risk Remain Elevated
According to market analysts, the current standoff between the U.S. and Iran could persist as both sides test each other’s limits.
While there is still an expectation that a resolution may eventually be reached, it is likely to involve a prolonged and uncertain negotiation process, keeping downside risks elevated across financial markets.
Earlier in the conflict, oil prices had surged close to $120 per barrel, before pulling back in recent weeks on hopes of diplomatic progress.
Uncertainty Over Ceasefire Talks
It remains unclear whether further negotiations will take place before the current ceasefire deadline.
U.S. officials indicated that a new round of talks could be held in Pakistan, led by Vice President JD Vance. However, Iranian state media reported that Tehran has not agreed to participate in additional discussions.
Iran has reportedly stated that it will not enter negotiations as long as the U.S. naval blockade remains in place.
The blockade, introduced last week, is widely seen as an attempt to increase pressure on Iran following limited progress in earlier ceasefire talks.
