Investing.com — Oil prices saw a significant climb on Monday amidst stalled negotiations between the U.S. and Iran, fueling concerns over constrained supply flows through the critical Strait of Hormuz and the potential for prolonged disruptions in global crude markets.
Brent crude futures rose 2% to $107.46 a barrel by 09:51 ET (13:51 GMT), while U.S. West Texas Intermediate also gained 2% to reach $96.29 a barrel.
Tamas Varga, an analyst at PVM Oil Associates, cautioned that a surge beyond current levels is a distinct possibility. “One must not rule out a pop above $150, if the conflict drags on,” Varga told Investing.com, emphasizing that in the event of a prolonged disruption, supply losses would inevitably outweigh demand destruction. He added, “Alternative energy is not readily available in vast quantity to make up for the shortfall. Consequently, consumers will have no choice but to live with higher oil prices.”
While U.S.-Iran negotiations remain at an impasse, investors are closely monitoring reports, initially from Axios, suggesting Iran has put forth a new proposal aimed at reopening the Strait of Hormuz and bringing an end to the conflict. This offer reportedly includes deferring discussions on Iran’s nuclear program, a condition likely to face strong opposition in Washington, which has consistently demanded Tehran surrender its uranium stockpiles and cease all nuclear activities.
U.S. President Donald Trump recently canceled a planned trip by American officials to Pakistan for Iran talks over the weekend, shortly after Iranian officials departed Islamabad. Earlier in April, Trump had indefinitely extended a ceasefire with Iran, but the two sides appear to remain far apart on key issues. Iran has called for the lifting of a U.S. naval blockade on its ports, while Washington insists on the reopening of the Strait of Hormuz before any substantive peace talks can commence.
Varga further warned that even a resolution to the conflict would not immediately alleviate market anxiety. “Even if the conflict ends today, the risk premium will remain elevated for a long period of time, even if the oil balance loosens considerably,” he stated. He also highlighted the fragile Israeli-Lebanon ceasefire as a source of investor discomfort, citing the live concern of renewed strikes on regional oil infrastructure should hostilities re-escalate.
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