Oil jumps over 3% as US-Iran peace talks collapse

Global oil prices surged more than 3 per cent on Monday after the United States and Iran failed to agree on a Washington-backed peace proposal, while the Strait of Hormuz remained largely closed, intensifying concerns over one of the worst energy supply disruptions in modern history.

Brent crude futures rose $3.21, or 3.17 per cent, to $104.50 a barrel, after touching as high as $104.80 earlier in the session. US West Texas Intermediate (WTI) crude climbed $3.06, or 3.21 per cent, to $98.48 a barrel, nearing the $99 mark as traders reacted to worsening geopolitical tensions in West Asia.

The latest spike came after US President Donald Trump publicly rejected Iran’s latest response to a proposed framework aimed at ending months of conflict in the region.

In a post on social media, Trump described Tehran’s reply as “TOTALLY UNACCEPTABLE”, signalling that negotiations between the US and Iran had once again hit an impasse despite a fragile ceasefire that has struggled to hold since early April.

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Hormuz disruptions deepen supply fears

The prolonged disruption in the Strait of Hormuz — one of the world’s most critical energy chokepoints — has continued to squeeze global supplies of crude oil, liquefied natural gas and refined fuels since the conflict escalated at the end of February.

The waterway handles roughly a fifth of the world’s oil trade, and the near-closure has sharply reduced shipments to major importers across Asia and Europe, pushing energy prices higher and fuelling fears of another global inflation shock.

The International Energy Agency has described the crisis as the biggest supply shock in history, underscoring growing concerns among policymakers and central banks already grappling with elevated inflation and slowing economic growth.

Nuclear dispute remains unresolved

According to a report by The Wall Street Journal, Tehran offered to transfer part of its stockpile of highly enriched uranium to a third country as part of the negotiations. However, Iran reportedly refused to dismantle its nuclear facilities — a key demand from Washington.

Iran later disputed the report through the semi-official Tasnim News Agency, adding further confusion over the status of the negotiations.

The failure to resolve the nuclear dispute has complicated attempts to secure a durable ceasefire, with both sides accusing each other of escalating tensions despite ongoing diplomatic contacts.

Fresh attacks raise shipping risks

Meanwhile, security concerns in the Gulf intensified after a drone strike on Sunday briefly set a cargo vessel ablaze off the coast of Qatar in the Persian Gulf.

The attack marked the latest in a series of shipping-related incidents since the ceasefire began earlier this year.

The United Arab Emirates and Kuwait also said they had intercepted hostile drones, highlighting the continuing volatility across the region.

The renewed attacks have further rattled shipping markets and insurers, with freight costs and maritime risk premiums climbing sharply over recent weeks.

Inflation concerns return

The sharp rise in oil prices is likely to renew pressure on governments and central banks worldwide, especially as higher energy costs threaten to feed into transport, manufacturing and food prices.

Economists warned that sustained crude prices above $100 a barrel could complicate interest-rate decisions in major economies, particularly in the United States and Europe, where policymakers have been trying to balance slowing growth with persistent inflation.

For large energy importers such as India, higher crude prices could widen trade deficits, weaken currencies and increase fuel-related inflationary pressures in the coming months.