Oil Prices Surge 5% To $95 As Iran Suspends Talks with US

Crude jumps on Middle East tensions after Iran halts US talks, escalating fears over supply disruption and conflict.

Oil prices surged on Monday after Iran suspended all exchange of negotiation messages with the U.S. due to continued Israeli ceasefire violations in Lebanon, dashing hopes for an imminent peace deal between Washington and Tehran to end the war in the Middle East.

West Texas Intermediate (WTI) crude contract for July delivery rose 5.8 per cent to $92.49 a barrel, on pace for its largest one-day gain since April 29, while Brent crude’s August contract was up 4.9 per cent to $95.60 a barrel, on track for its best day since May 4.

The moves followed reports from Iran’s state-affiliated media outlet Tasnimon Monday that Iranian negotiators will stop exchanging messages with the U.S. through intermediaries and that Tehran will move to fully close the Strait of Hormuz in retaliation for ongoing ceasefire violations.

Reports say Israeli Prime Minister Benjamin Netanyahu overnight ordered strikes on the southern suburbs of Beirut, the capital Lebanon. U.S. Central Command also announced early Monday morning that it launched “self-defense strikes” on drone sites in Iran’s southern region, close to the Strait of Hormuz.

CENTCOM said the “measured and deliberate strikes” were in retaliation for a U.S. drone being shot down by Iranian authorities over international waters, according to a post on X.

But the development prompted Iran to suspend all indirect talks with the US and announced it would pursue “complete closure of Strait of Hormuz,” accusing Israel of “continuing crimes” in Lebanon and stating that any ceasefire breach on one front breaks the truce in general.

IRGC-affiliated news agency Tasnim reported the news as the two sides remained apart on a deal to extend the ceasefire and end the war.

“Considering that Lebanon was one of the preconditions for the ceasefire and that this ceasefire has now been violated on all fronts, including Lebanon, the Iranian negotiating team is suspending dialogues and exchange of texts through mediators,” Tasnim reported.

“Furthermore, Iran and the Axis of Resistance have resolved to pursue the complete closure of the Strait of Hormuz and activate other fronts, including the Bab al-Mandab Strait, as part of efforts to punish Israel and its supporters,” Tasnim said in a separate post on X.

Tehran has also demanded a full withdrawal of Israeli forces from Lebanon, according to the news agency.

However, in a reaction, the US President Donald Trump said that talks were continuing with Iran, despite Iranian state media claiming earlier in the day that Tehran had suspended talks over Israel’s attacks in Lebanon.

“Talks are continuing, at a rapid pace, with the Islamic Republic of Iran,” Trump said on Truth Social. Previously, Trump and the administration have said they commonly receive conflicting messages from Iran publicly and privately.

Shortly before his promise that talks were continuing, Trump had also posted on Truth Social that he had a productive conversation with Benjamin Netanyahu, in which the Israeli prime minister said he would not be sending troops to Beirut.

It is unclear if the pause on mediated exchanges has also temporarily closed the door to all talks, or if some channels of communication remain open at this stage.

With the move, the Islamic Republic has further escalated what some term as maximalist demands for a peace deal with the US, while also expanding its tactical front by dictating fresh terms for any agreement and projecting the posture of a party that believes it holds the upper hand in the conflict.

Iranian Foreign Minister Abbas Araghchi said earlier on Monday that a violation on one front of the ceasefire is a violation “on all fronts” and that the US-Iran ceasefire is “unequivocally a ceasefire on all fronts, including in Lebanon”.

“Its violation on one front is a violation of the ceasefire on all fronts. The US and Israel are responsible for the consequences of any violation,” Araghchi wrote on X.

Mohammad Bagher Ghalibaf, Iran’s parliament speaker and lead negotiator, has also accused the US of breaching the ceasefire by continuing its military blockade of the Iranian ports and of not stopping the Israeli offensive in Lebanon.