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US Oil Update: Crude Surges on Middle East Tensions, Uncertainty Over US-Iran Talks

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Crude oil futures climbed over 5% in midday trading on Monday as heightened geopolitical tensions in the Middle East stoked supply disruption fears, and conflicting US-Iran signals fueled market volatility.

Front-month West Texas Intermediate crude futures rallied 5.24% to $91.88 per barrel, while Brent futures were up 4.41% to $95.19/bbl.

Bjarne Schieldrop, chief commodities analyst at SEB Research, said the likely path out of the conflict has been, for quite some time now, a deal that is essentially not a deal, but rather an agreement to talk further and resolve contentious issues later.

On Monday, Iran reportedly said it would suspend indirect communications with the US, and its allied "Resistance Front" was reported to be planning to completely block the Strait of Hormuz and choke other waterways, including the Bab el-Mandeb Strait.

However, President Donald Trump pushed back on those reports, saying talks were still ongoing.

"Talks are continuing, at a rapid pace, with the Islamic Republic of Iran," Trump posted on Truth Social.

The US President had earlier said he was not informed in advance of any decision by Iran to halt negotiations and, in phone interviews with US media, dismissed concerns over the suspension.

"I really don't care. I couldn't care less," Trump reportedly told CNBC earlier on Monday.

Foreign Minister Abbas Araghchi said that the truce agreement between the US and Iran applies to "all fronts, including in Lebanon," adding that a breach in one area constitutes a violation of the broader arrangement.

"The ceasefire between Iran and the US is unequivocally a ceasefire on all fronts, including in Lebanon," Araghchi said, adding that the US-Israeli alliance is responsible for the consequences of any violation.

In a separate Truth Social post on Monday, Trump said he held a call with Israel's Prime Minister Benjamin Netanyahu and instructed Israeli troops to halt a planned attack on parts of the Lebanese capital, Beirut.

He added that Hezbollah had also agreed "that all shooting will stop," adding that "Israel will not attack them [Hezbollah], and they will not attack Israel."

For now, Hormuz transits remain sharply below pre-conflict levels.

Scotiabank strategists said a prolonged geopolitical conflict involving Iran would tighten global oil markets for an extended period and generate significant supply disruptions.

The US military has redirected 121 Iran-linked commercial vessels and disabled five others since imposing the blockade on April 13, US Centcom said on Monday, while Iran's Islamic Revolutionary Guard said that 15 vessels, including four oil tankers, had transited the Strait in the last 24 hours.

For shipping markets, constrained routing patterns indicate that operational risk remains elevated despite the recent pause in physical incidents, Kpler strategists said on Monday.

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