Oil Prices Surge as U.S.-Iran Talks Collapse

Oil prices surged to three-week highs on Monday as diplomatic efforts to resolve the U.S.-Iran conflict collapsed again, threatening to keep millions of barrels per day off global markets. Brent crude rose 1.3% to $106.73 per barrel, touching $108.50 earlier in the session, while U.S. WTI crude climbed 1% to $95.34. The gains came after President Donald Trump canceled plans to send envoys Steve Witkoff and Jared Kushner to Islamabad for talks with Iran, citing internal disagreements within Iran's leadership and dismissing the need for travel when negotiations can happen by phone. Iran's Revolutionary Guard also reportedly boarded two cargo ships near the Strait of Hormuz, further escalating tensions in one of the world's most critical energy chokepoints. Iran has presented a new proposal to the United States through Pakistani mediators, offering a prolonged ceasefire or permanent end to the war in exchange for reopening the Strait of Hormuz and lifting the U.S. naval blockade, with nuclear negotiations deferred to a later phase. Trump discussed the proposal with his national security team on Monday, though administration officials indicated he appears unlikely to accept it, particularly since halting uranium enrichment remains a core U.S. demand. The president told Fox News he is actively strangling Iran's oil exports, expecting Tehean to concede within weeks, and a White House summit on the Iran situation was expected Monday. The diplomatic impasse means between 10 million and 13 million barrels per day are being withheld from international markets, according to analyst Tamas Varga of PVM Oil Associates, who noted that prices will likely continue rising without a breakthrough. Iran has largely closed the Strait of Hormuz, while the United States blocks Iranian ports, leaving traffic severely reduced. Goldman Sachs revised its Q4 forecasts upward to $90 per barrel for Brent and $83 for WTI, warning that economic risks exceed their base scenario due to unprecedented supply shock conditions. Last week, Brent and WTI recorded their biggest weekly gains since the start of the war, surging nearly 17% and 13% respectively.