Oil prices advanced after efforts to hold a second round of US–Iran peace negotiations broke down once again.
Brent crude, the international benchmark, increased by about 2% to $109.33 (£80.72) per barrel, while US crude also gained 2%, reaching $96.78.
On Saturday, US President Donald Trump stated that Washington had scrapped plans to dispatch a delegation to Pakistan for talks with Iranian representatives.
Energy markets remain strained due to ongoing conflict involving Iran, which has disrupted global supply routes, particularly through the Strait of Hormuz, a vital shipping corridor that is now largely restricted.
Iran’s Foreign Minister Seyed Abbas Araghchi said on Sunday that discussions were continuing with Oman, a key neighbour along the strait, focusing on bilateral relations and regional developments.
He added on social media that the talks centred on ensuring safe passage through the waterway for the benefit of neighbouring countries and global trade, stressing that regional stability remained a priority.
Araghchi also travelled to St Petersburg on Monday, where Iranian state media reported he intended to meet Russian President Vladimir Putin for further discussions.
Roughly 20% of global crude oil and liquefied natural gas typically moves through the Strait of Hormuz, highlighting its strategic importance to global energy supply.
Since Trump announced an extension of a ceasefire last week to allow Tehran to present a unified proposal, Brent crude has risen by more than 10%.
BNP Paribas portfolio manager Sophie Huynh warned that continued closure of the strait could have widespread economic consequences, potentially impacting everyday goods from packaging materials to pharmaceuticals.
She noted that the issue extends beyond crude oil itself, as modern economies rely heavily on refined petroleum products rather than raw crude consumption.
If the disruption lasts several weeks, she added, the impact on global supply chains could become significantly more severe.
Market analysts say oil traders are currently taking a more cautious approach, waiting for solid confirmation of de-escalation rather than reacting to fragile diplomatic signals.
Singapore Management University economics lecturer Goh Jing Rong said investors are demanding clearer evidence of progress before adjusting positions, rather than relying on uncertain ceasefire announcements.
In a post on Truth Social, Trump said excessive travel and logistical challenges led to the cancellation of US plans to send officials to Islamabad.
He also claimed that internal divisions within Iran’s leadership were creating confusion, adding that it was unclear who was actually in control.
He further stated that the United States held stronger negotiating leverage and suggested that Iran would need to initiate contact if it wished to resume dialogue.
In the United Kingdom, the Bank of England is expected to attend an emergency COBRA meeting, where officials will assess how the conflict could affect living costs.
Rising oil prices have already pushed up fuel costs, with concerns growing that household energy bills could increase further if tensions persist.
In financial markets, London’s FTSE 100 slipped 0.18% at the start of trading, while European indices showed mixed performance, with France’s CAC remaining flat and Germany’s DAX edging up 0.13%.
Asian markets closed higher overall, with several indices reaching record levels despite earlier losses at the start of the conflict.
Japan’s Nikkei 225 rose 1.38%, extending a nearly 14% gain over the past month, while South Korea’s Kospi jumped more than 20% over the same period, finishing up 2.15%.
Both Japanese and South Korean equities were initially hit due to their dependence on energy imports from the Gulf region, making them sensitive to disruptions in global oil supply.