Oil prices surge nearly 2% as US-Iran talks stall, Strait of Hormuz disruptions tighten supply

Global oil prices extended their rally on Monday, rising nearly 2% as stalled diplomatic talks between the United States and Iran, coupled with continued disruptions in the Strait of Hormuz, intensified concerns over global supply. Brent crude climbed $2.16, or 2.05%, to $107.49 per barrel, marking its highest level since April 7, while US West Texas Intermediate (WTI) gained $1.77, or 1.88%, to reach $96.17 per barrel.

The surge follows strong gains last week, when Brent and WTI recorded increases of nearly 17% and 13% respectively, reflecting the sharpest weekly rise since the conflict began. Market sentiment has remained volatile as hopes of reviving diplomatic engagement weakened over the weekend. US President Donald Trump cancelled a planned Islamabad visit by envoys Steve Witkoff and Jared Kushner, even as Iranian Foreign Minister Abbas Araqchi arrived in Pakistan for discussions.

Supply pressures have further escalated as Tehran has effectively restricted movement through the Strait of Hormuz, a critical global oil transit route, while Washington continues its blockade of Iranian ports. Shipping data indicates severely reduced traffic through the waterway, with only one oil products tanker entering the Gulf on Sunday. The strait typically handles nearly one-fifth of global oil flows, making disruptions highly sensitive for international markets.

Amid the tightening supply outlook, financial institutions have revised their forecasts. Goldman Sachs raised its fourth-quarter oil price projections to $90 per barrel for Brent and $83 for WTI, citing heightened geopolitical risks and supply constraints. Analysts warn that the combination of restricted shipping routes, limited production capacity, and ongoing geopolitical uncertainty is likely to keep oil prices volatile in the near term.