Oil prices surge to three-week high as US-Iran talks falter

Oil prices have climbed to a three-week high, with benchmark Brent crude surging approximately 2 percent to just under $108 a barrel on Monday as peace talks between the United States and Iran faltered. The price increase, returning crude to levels not seen since before initial negotiations began in early April, follows President Donald Trump's decision to cancel a planned trip to Pakistan by his envoys Steve Witkoff and Jared Kushner for ceasefire discussions. Trump told Fox News that Iran could contact the United States directly rather than relying on in-person meetings, stating: "If they want, we can talk but we're not sending people. You know, there is a telephone. We have nice, secure lines." Despite the diplomatic setback, there are signs of potential progress. Reports from Axios indicate that Tehran has submitted a new proposal to Washington outlining a path to reopen the strategic Strait of Hormuz, the waterway through which approximately one-fifth of global oil supplies pass, and end the conflict, with nuclear negotiations deferred to a later date. The Strait has remained effectively blocked since a ceasefire was agreed on April 7, despite earlier hopes that commercial tankers could resume passage. Negotiations have stalled because Iran insists it will not engage while the US blockade remains in place, while American officials have expressed uncertainty about who exactly they are negotiating with. The geopolitical uncertainty is creating divergent market reactions. While oil prices have surged and European gas futures have risen, Japan's Nikkei 225 index closed at a record high of 60,537 points, buoyed by hopes that the Iranian proposal could pave the way for a broader peace agreement. Meanwhile, UK estate agent Knight Frank has halved its house price growth forecast for 2025 to 1.5 percent, citing higher mortgage rates and dampened buyer sentiment resulting from the Middle East conflict. Economists at Jefferies maintain that a deal remains the most likely outcome, though they caution that short-term escalation risks persist as patience on both sides appears to be wearing thin.