Oil prices rose more than 1% on Monday as peace negotiations between the United States and Iran hit a standstill, while shipments through the strategic Strait of Hormuz remained restricted, tightening global oil supplies.
Brent and WTI gain ground
Brent crude futures increased by $1.35, or 1.3%, to $106.68 a barrel by 07:53 a.m. Saudi time, pulling back from earlier gains of over $2 a barrel. US West Texas Intermediate (WTI) crude rose 95 cents, or 1%, to $95.35 a barrel. Last week, both benchmarks posted their largest weekly advances since the onset of the conflict, with Brent gaining nearly 17% and WTI climbing 13%.
Peace efforts falter
Hope for a diplomatic resolution diminished over the weekend after US President Donald Trump canceled a planned visit to Islamabad by his envoys Steve Witkoff and Jared Kushner, even as Iranian Foreign Minister Abbas Araqchi arrived in Pakistan. The stalled talks have heightened concerns about prolonged disruptions in the region.
Analysts pointed to escalating rhetoric as a key factor. Priyanka Sachdeva, an analyst at Phillip Nova, noted that President Trump’s recent post on Truth Social, urging military action against Iranian boats laying mines in the Strait of Hormuz and claiming full control over the waterway, has continued to drive up war risk premiums.
Supply constraints persist
Tehran has largely closed the Strait of Hormuz, while Washington has imposed a blockade on Iranian ports. Traffic through the vital chokepoint remained severely limited, with only one oil products tanker entering the Gulf on Sunday, according to shipping data from Kpler.
In response to the ongoing disruptions, Goldman Sachs raised its oil price forecasts for the fourth quarter to $90 a barrel for Brent and $83 for WTI, citing reduced output from the Middle East. The investment bank warned of significant economic risks beyond its base case, highlighting the net upside risks to oil prices, unusually high refined product prices, product shortages, and the unprecedented scale of the supply shock.
