Key Points:
- Oil and gas prices soared after US Navy seized Iranian ship.
- Tehran reimposed controls in Strait of Hormuz.
- Peace talks prospects remain uncertain as ceasefire nears end.
- Global energy crisis fears deepen due to supply disruptions.
Oil and natural gas prices surged after a chaotic weekend in the Middle East saw the US Navy seize an Iranian ship, with Tehran firing at vessels and reimposing controls in the crucial Strait of Hormuz. These events have reignited fears of a deepening global energy crisis.
Brent crude jumped by as much as 7.9%, wiping out most of its declines from Friday, which had followed an announcement that the key waterway would reopen. European natural gas prices also soared, rising by up to 11%. Tehran once again closed the chokepoint on Saturday, stating that a US blockade of Iran-linked ships violated a ceasefire agreement set to end on Tuesday.
President Donald Trump confirmed that the US Navy had fired upon and seized the ship in the Gulf of Oman. He said the vessel failed to heed warnings to stop as it sailed toward Hormuz. This incident marked the first major encounter in the week-old blockade and occurred hours after conflicting reports about potential peace talks in Islamabad. Trump had expressed optimism for a deal, while Iranian officials stated there was “no clear prospect” for an agreement.
Haris Khurshid, chief investment officer at Karobaar Capital LP, commented, “The market’s still carrying a risk premium into the deadline, but just not fully committing to it.” He added that if the situation remains unchanged, oil prices could gradually push higher to around 105–105–105–115, though with continued volatility driven by headlines.
A White House official confirmed that Vice President JD Vance, special envoy Steve Witkoff, and the president’s son-in-law Jared Kushner are scheduled to depart for Islamabad on Monday night for talks on Tuesday. However, Iranian state TV cited a member of the country’s negotiating team denying any plans to participate in that meeting.
The standoff over the Strait of Hormuz poses a significant threat to global energy supplies. Approximately a fifth of the world’s oil and liquefied natural gas flowed through this strait before the US-Israeli war on Iran began in late February. The ongoing crisis undermines Trump’s weekend prediction of a swift end to the conflict. Beyond Hormuz, other unresolved issues include Iran’s nuclear capabilities and Israel’s ongoing invasion of Lebanon.
Tracking data compiled by Bloomberg showed no ship crossings through Hormuz on Sunday afternoon in London. On Saturday, at least 13 oil tankers turned back toward the Persian Gulf, abandoning their attempts to exit the strait, highlighting the severity of the renewed restrictions.
