Peter HoskinsAnd
Nick Edser,Economic journalists
Global oil prices jumped more than 5% after US President Donald Trump said the United States had intercepted and seized an Iranian-flagged cargo ship.
Benchmark Brent crude oil rose 5.4% to $95.27 (£70.62) a barrel, while the US benchmark was 5.9% higher at $88.79.
The increases reversed some of the sharp declines seen Friday when Iran said the Strait of Hormuz would be “completely open” to commercial shipping for the remainder of the ceasefire.
But on Saturday, Iran announced it was closing the strait again and any ships approaching it would be targeted. The waterway is critically important because it typically carries about 20% of the world’s oil and liquefied natural gas.
Energy markets have seen sharp swings since the United States and Israel attacked Iran on Feb. 28 and Tehran responded by threatening to target shipping in the strait.
Trump said his representatives would be in Pakistan on Monday for negotiations. A White House official said Vice President JD Vance would lead the US delegation.
But Iranian state media said Tehran has “no current plans to participate” in the talks, although Iranian officials have yet to clarify the country’s position.
“Oil markets continue to move in response to swinging posts from the United States and Iran on social media, rather than realities on the ground that remain difficult to quickly resume oil flows,” analyst Saul Kavonic of financial services firm MST Marquee told the BBC.
“This is all part of the negotiations, which are taking place physically and in real time in the Strait of Hormuz.”
Shanti Kelemen, co-chief investment officer at 7 Investment Management, said there was “a bit of fatigue” in the market given the “bumps and changes” of the situation.
“I think the market has stopped believing in words and will turn more to actions,” she told the BBC.
The Strait of Hormuz remained closed on Sunday, a day after the Islamic Revolutionary Guard Corps (IRGC) announced it was ending a temporary reopening due to the US blockade, which it said violated the terms of their ceasefire agreement. Iran said it would remain closed until the United States ends its naval blockade.
Trump said Friday that the naval blockade would continue until an agreement is reached between the two countries.
Stock markets were mixed on Monday. In Europe, the FTSE 100 index of the largest companies listed in London opened 0.4% lower, while Germany’s Dax and France’s Cac 40 both fell more than 1%.
However, Asian markets had risen earlier, with Japan’s Nikkei index closing 0.6% higher and South Korea’s Kospi 0.4%.
Energy prices have seen volatile trading since the start of the war in Iran.
Brent crude, a benchmark for oil futures prices, was trading at around $70 a barrel before the conflict. On March 9, it reached almost $120.
Futures contracts are an agreement to buy or sell assets at a fixed price on a specified future date. The currently listed Brent futures contract is for crude oil that will be delivered in June.
The conflict has sparked a global energy crisis with prices soaring, while some countries face fuel shortages.
Governments have ordered employees to work from home, shortened the work week, declared public holidays and closed universities early to preserve supplies.
Even China – which is estimated to have reserves equivalent to three months of imports – is making adjustments, limiting the rise in fuel prices as citizens face a 20% price hike.
Fatih Birol told AP there could soon be flight cancellations if supplies remain blocked.