Oil prices surged by more than five percent on Monday as concerns mounted that the fragile ceasefire between the United States and Iran could collapse. Tensions escalated after U.S. forces seized an Iranian cargo vessel, while maritime movement through the Strait of Hormuz remained largely stalled.
Brent crude, Nigeria’s key oil benchmark, climbed by $4.61 (over 5.1%) to settle at $95.10 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) rose by $4.33, or 5.16%, reaching $88.10 per barrel.
The rebound follows a sharp drop on Friday, when both benchmarks plunged more than nine per cent, their steepest single-day fall since April 18, after Iran announced that commercial vessels could freely pass through the Strait of Hormuz for the duration of the ceasefire.
However, uncertainty resurfaced as doubts grew over whether scheduled peace talks would proceed. U.S. President Donald Trump has already ruled out extending the ceasefire beyond Wednesday, raising fears of renewed confrontation.
The latest spike in tensions came after Washington confirmed it had intercepted and seized an Iranian ship accused of attempting to breach its naval blockade. Tehran has since vowed retaliation, further increasing the risk of hostilities resuming.
Signals from Iran regarding participation in the proposed talks have been mixed. While a senior Iranian official indicated no final decision had been reached, Trump revealed that U.S. Vice President JD Vance and an American delegation were en route to Pakistan for negotiations.
Meanwhile, shipping activity through the Strait of Hormuz has slowed dramatically. Data shows only three vessels passed through the critical route within a 12-hour window on Monday, compared to over 20 ships on Saturday, the highest traffic recorded since early March.
Trump reiterated that the ceasefire, which began on April 7, is set to expire “Wednesday evening Washington time,” stressing that an extension is “highly unlikely.” He added, “I’m not going to be rushed into making a bad deal,” and warned that conflict could resume if no agreement is reached.
Elsewhere, the United Arab Emirates has reportedly opened discussions with the U.S. over possible financial support should the crisis deepen. Concerns are growing that prolonged instability could strain its economy, disrupt oil exports, and trigger capital flight.
Iran, however, has signaled reluctance to return to the negotiating table. Officials cited the ongoing U.S. blockade and what they described as “unrealistic demands” as key obstacles. Foreign Ministry spokesman Esmaeil Baqaei stated that “no decision” has been made regarding future talks.
The broader conflict, involving the U.S., Iran, and Israel, is approaching the end of a two-week ceasefire that paused hostilities triggered by strikes in late February. So far, only one round of negotiations held in Islamabad has taken place, ending without a breakthrough.
Despite the uncertainty, Trump maintained that Washington is offering a “fair and reasonable deal,” while also warning of further action against Iran’s infrastructure if talks fail.
In the latest development, U.S. forces intercepted an Iranian-flagged cargo ship in the Gulf of Oman after it allegedly attempted to bypass the blockade. Trump claimed the vessel was stopped after it refused to comply, saying U.S. forces disabled it mid-journey.
Iran has condemned the blockade as a violation of the ceasefire agreement, with parliamentary speaker Mohammad Bagher Ghalibaf describing the move as “a foolish and stupid decision.”
The blockade now applies to vessels of all nations entering or leaving Iranian ports across the Arabian Gulf and Gulf of Oman, with the U.S. military warning that any attempts to breach it will result in interception and seizure.