Oil prices surge as US-Iran talks hit deadlock

Global oil prices climbed sharply on Monday as hopes for a quick breakthrough in US-Iran peace efforts weakened, keeping concerns over Middle East supply disruptions in focus.

Brent crude futures gained more than 3% during early trading, rising $3.43, or 3.29%, to $107.75 a barrel. US West Texas Intermediate crude also advanced, increasing $2.14, or 2.32%, to $94.55 a barrel.

The latest rise followed US President Donald Trump’s rejection of an Iranian proposal aimed at resolving the conflict and facilitating the reopening of the Strait of Hormuz, a key route for global energy shipments.

Iran had presented the proposal during the United Nations General Assembly in New York and said it was delivered to the US through Qatari mediators. Trump rejected the proposal over the weekend but later indicated that American negotiators were expected to hold further discussions with Iran during the week.

Market analysts said the rejection reduced expectations of an immediate diplomatic breakthrough, although negotiations remained possible. Investors are closely monitoring developments around the Strait of Hormuz because any prolonged disruption could affect global crude supplies and shipping costs.

Tensions also remain high in the wider region. A Saudi-led coalition in Yemen said it had intercepted two ballistic missiles and two drones launched by the Iran-backed Houthis towards Saudi Arabia.

Oil markets have shown mixed movements in recent sessions. Brent gained around 0.4% last week, while WTI fell 7.9% amid concerns over a possible US restriction on diesel exports.

US diesel prices have reached record levels, raising concerns about inflation and prompting discussion over possible limits on exports. Analysts said such restrictions could reduce supplies available to international markets and push up prices in regions that depend on US refined fuel.