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EMEA Oil Update: Crude Rallies Supported by Diplomatic Deadlock Between US-Iran

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Crude prices surged on Monday after President Donald Trump's dismissal of an Iranian peace overture intensified market fears that the strategic Strait of Hormuz could face a prolonged and costly shutdown.

The Brent futures contract gained about 2% to $103.24 per barrel, while Murban oil futures were up 3.4% to $102.18/bbl.

Analysts noted that the price spike signals a shift in market sentiment as traders abandon hope for a quick diplomatic fix in favor of a tighter global supply outlook.

Although optimism for an immediate 14-point peace memorandum is rapidly evaporating, investors are clinging to a glimmer of hope regarding a scheduled summit between President Trump and Chinese President Xi Jinping.

Analysts at ING noted that the market is now betting on China utilizing its significant economic leverage over Tehran to push for a workable agreement, though they cautioned that such mediation is "easier said than done."

This surge marks a sharp reversal from last week's performance, where both major benchmarks ended the period lower despite intermittent military skirmishes.

Meanwhile, three very large crude carriers, carrying 2 million barrels of crude each, passed through the vital Strait of Hormuz waterway recently, with tracking devices shut down to avoid an attack from Iran, Reuters reported Monday, citing Kpler and LSEG data.

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