Oil and natural gas prices jumped sharply on Monday after fresh risks to energy shipments through the Strait of Hormuz raised doubts about upcoming peace talks between the United States and Iran.
The Strait of Hormuz is a narrow waterway in the Persian Gulf through which nearly one-quarter of the world’s oil and gas supplies normally pass. Renewed tensions there have disrupted shipping and added pressure to global energy markets.
Benchmark oil prices rose more than 5 percent. Brent crude, the global standard, climbed above $95 per barrel, while U.S. West Texas Intermediate also gained strongly. Natural gas prices increased as well, with European gas rising about 4 percent.
The latest spike followed a chaotic weekend. The U.S. Navy seized an Iranian ship, and both sides accused each other of violating a fragile ceasefire agreement. President Donald Trump told reporters it is “highly unlikely” he would extend the ceasefire if no deal is reached by its Wednesday expiration. He added that the strait would stay blocked until an agreement is finalized.
“The strait was never opened as far as I’m concerned,” said Frank Monkam, head of macro trading at Buffalo Bayou Commodities. He noted that the gap between the two sides on key issues remains wide, which could give traders more reason to bet on higher prices if tensions worsen after the deadline.
Oil prices have swung wildly in recent days as news about the talks and shipping access has shifted quickly. The standoff over Hormuz is one of several unresolved problems, including Iran’s nuclear program and Israel’s actions in Lebanon. The U.S. is also set to host another round of talks between Israel and Lebanon this week.
On Monday, commercial traffic through the strait was almost at a standstill. Only a few tankers moved in either direction, while the Pentagon reported that U.S. forces had turned back or sent 27 vessels back to Iranian ports since the naval blockade began.
“Markets are still betting on a timely resolution, but each day raises shortage risk,” said Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo. He pointed out that physical oil supplies are already tight because of blocked routes, longer shipping times, and higher costs for freight and insurance.
The disruptions have created a major supply shock. This is fueling higher inflation and could slow economic growth around the world. Business surveys expected this week may show signs of stagflation—a mix of slow growth and rising prices.
U.S. Energy Secretary Chris Wright warned that American gasoline prices could stay at $3 per gallon or higher into next year. President Trump disagreed, saying prices would drop quickly “as soon as this ends.” Still, sustained high gas prices could create political problems for the White House during a midterm election year.
“Headline melee continues, with markets firmly back in reaction mode,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. Even though prices have pulled back from their peaks, she added, the market is still counting on a quick return of normal flows. If that is delayed, physical supplies could tighten further and shift trader expectations.
With the ceasefire deadline just days away, traders are watching closely for any breakthrough in talks—or signs that the blockade and disruptions will last longer. The situation remains fluid, and further volatility in energy prices is likely.
