The price of oil surged on Sunday after a second round of peace talks between the US and Iran appeared on the verge of collapse before they even began.
Brent crude oil futures rose by 7% when the markets opened at 6 p.m. in New York, opening at $97 a barrel. West Texas Intermediate oil futures increased by 6%, costing $88 a barrel when the market opened.
Oil costs have skyrocketed worldwide since the US and Israel attacked Iran in late February. Iran retaliated by effectively closing the Strait of Hormuz, a waterway that connects the Persian Gulf to the Indian Ocean through which around 20% of the world’s oil supply and liquified natural gas passes.
Prior to the weekend’s developments, crude prices had moderated in recent weeks, falling more than 20% from highs through Friday on renewed optimism for a peace deal.
But the continued closure of the Strait has forced several countries to enact energy-saving tactics as prices remain high. The Philippines, for example, implemented a four-day workweek for government employees. In America, the national average price for a gallon of regular gas surpassed $4 in March, marking the first time since August 2022. Additionally, rising jet fuel costs have forced some airlines to cancel routes and increase customer fees.
However, the tensions and fragile ceasefire have contributed to volatile trading.
Most recently, President Donald Trump said peace talks between the US and Iran would resume after a tense weekend. Iran fired on ships a day after the US president announced the vital Strait of Hormuz waterway was open.
“My Representatives are going to Islamabad, Pakistan — They will be there tomorrow evening, for Negotiations,” Trump wrote in a Truth Social Post on Sunday. “We’re offering a very fair and reasonable DEAL, and I hope they take it, because if they don’t, the United States is going to knock out every single Power Plant, and every single Bridge, in Iran.”
However, Iran said hours later that it would not participate in the second round of negotiations with the US.
“Iran stated that its absence from the second round of talks stems from what it called Washington’s excessive demands, unrealistic expectations, constant shifts in stance, repeated contradictions, and the ongoing naval blockade, which it considers a breach of the ceasefire,” IRNA, the country’s official news agency, posted in an X post on Sunday.
Later that day, Trump said a US Navy destroyer shelled an Iranian-flagged cargo ship that tried to pass the blockade.
“The Iranian crew refused to listen, so our Navy ship stopped them right in their tracks by blowing a hole in the engineroom,” Trump wrote on Truth Social. “Right now, U.S. Marines have custody of the vessel. The TOUSKA is under U.S. Treasury Sanctions because of their prior history of illegal activity. We have full custody of the ship, and are seeing what’s on board!”
Monday’s meeting would have been the second time the US and Iran have met for negotiations in Islamabad amid the current conflict. Vice President JD Vance participated in peace talks earlier this month, though they ultimately failed after 21 hours. The heightened tensions come amid a two-week ceasefire deal between the US and Iran.
In response to the failed negotiations, Trump said on April 12 that the US Navy would impose a blockade of the Strait of Hormuz “effective immediately.” Iran agreed not to attack ships transiting the Strait of Hormuz on Friday as part of the ceasefire deal that extended to Lebanon, but it reversed course the next day and closed it again over the US blockade of its ports.