Oil prices climbed more than 1% on Monday as stalled peace efforts between the United States and Iran, along with restricted flows through the Strait of Hormuz, continued to tighten global supply conditions.
Brent crude futures rose $1.35, or 1.3%, to $106.68 per barrel by 04:53 GMT, after earlier gains of more than $2 per barrel eased. U.S. West Texas Intermediate crude traded at $95.35 per barrel, up 95 cents, or 1%.
Both benchmarks posted strong gains last week, with Brent rising nearly 17% and WTI up about 13%, marking their largest weekly increases since the conflict began.
Optimism around renewed diplomacy faded over the weekend after Donald Trump cancelled a planned visit to Islamabad by his envoys Steve Witkoff and Jared Kushner, even as Iranian Foreign Minister Abbas Araqchi arrived in Pakistan.
“President Trump’s recent post on Truth Social, urging to shoot and kill any Iranian boat laying mines in the Strait of Hormuz, alongside his claims of having full control over Hormuz, has continued to fuel elevated war premiums,” said Priyanka Sachdeva, analyst at Phillip Nova.
Tehran has largely shut down the strait, while Washington has imposed a blockade on Iranian ports. Shipping activity remains constrained, with data from Kpler showing that only one oil products tanker entered the Gulf on Sunday.
Goldman Sachs raised its oil price outlook for the fourth quarter, forecasting Brent at $90 per barrel and WTI at $83, citing reduced output across the Middle East.
“The economic risks are larger than our crude base case alone suggests because of the net upside risks to oil prices, unusually high refined product prices, products shortages risks, and the unprecedented scale of the shock,” analysts led by Daan Struyven said in a note on Sunday.