The situation in the Middle East has tightened again, prompting the energy market to quickly shift toward risk aversion. After Iran suspended negotiations and document exchanges with the United States through international mediators, markets reassessed the supply risks around the Strait of Hormuz, causing international oil prices to rise significantly on Monday.
Brent approaches $100
Reports show that Brent crude oil futures rose over 6%, briefly reaching around $97 per barrel; West Texas Intermediate (WTI) crude oil increased by more than 7%, surpassing $94 per barrel. Market reactions centered on a key concern: if the Middle East situation continues to deteriorate, global oil transportation could face direct disruption.
Iran’s semi-official media Tasnim reported that Tehran’s negotiation team has suspended contacts with the United States. This development is believed to be linked to Israel’s expanded military operations in Lebanon. Iran has also accused Washington of sending conflicting signals and delaying the process during negotiations.
President Trump stated that he was not informed of Iran's decision prior to its public announcement. He told NBC News that this development does not necessarily mean an immediate escalation of conflict, and that the United States will continue to maintain its current blockade strategy rather than immediately expanding military action.
Risk in the Strait of Hormuz is escalating
The direct trigger for this round of oil price increases is the market refocusing on the Strait of Hormuz. This waterway has long carried about one-fifth of the world's crude oil shipments; any expectation of potential disruption typically leads the oil market to quickly incorporate a higher risk premium.
Tasnim also mentioned that Iran may consider fully closing the Strait of Hormuz and could create disruptions around the Bab el-Mandeb Strait. Although Iranian officials have not officially confirmed any such plans, traders have already begun pricing in the possibility of potential supply disruptions.
For the energy market, the impact of such news often depends not on whether measures have been implemented, but on whether expectations of transportation security have been undermined. Once major shipping routes face uncertainty, crude oil futures prices typically rise first.
Military actions intensify market volatility
Amid stalled diplomatic progress, regional military tensions continue to rise. Reports indicate that U.S. and Iranian forces remained in conflict over the weekend through Monday, while Israel expanded its operations in Lebanon and launched a new wave of strikes on Hezbollah-controlled areas near Beirut.
Israeli Prime Minister Netanyahu is reportedly ordered additional actions. If the conflict continues to spill over, market concerns about Middle Eastern supply chains may further expand, and oil prices will remain driven by geopolitical developments.
In the short term, traders remain focused on two key developments: whether diplomatic contacts between the U.S. and Iran resume, and whether there are clearer signals of increased restrictions in the Strait of Hormuz. If diplomatic channels reopen, recent price gains may be partially reversed; if the situation continues to deteriorate, oil prices may remain elevated for a longer period.