Crude oil prices surged on Monday, 1 June, as renewed tensions in the Middle East reignited fears that global supply disruptions could persist for a longer period.
Benchmark Brent crude futures jumped $7.3 per barrel to hit the day’s high of $97.79, recouping much of their recent losses and putting the contract on track for its first daily gain in four sessions. Meanwhile, US West Texas Intermediate (WTI) crude futures surged 8.4% to trade above $94.70 per barrel.
Oil prices had cooled in recent sessions after hopes emerged that the conflict in West Asia was moving toward de-escalation. However, those expectations faded following the latest escalation in the region, raising concerns that geopolitical tensions could remain elevated for longer.
Iran suspends talks with US amid fresh escalation
The sharp rebound in oil prices came after Iran reportedly said it would suspend the exchange of messages with the US in response to Israel’s intensifying military operations in Lebanon.
According to the semi-official Tasnim News Agency, Iran’s negotiating team will halt talks and the exchange of documents through mediators, accusing Washington of sending mixed signals and prolonging negotiations.
Tasnim also reported that Tehran could completely block the Strait of Hormuz and open additional fronts, including the Bab el-Mandeb Strait. The Bab el-Mandeb Strait is a critical global trade chokepoint connecting the Red Sea to the Gulf of Aden.
Iran and the US have also accused each other of violating the fragile ceasefire in their three-month conflict. Both sides launched fresh strikes over the weekend, while Israel ordered troops to push deeper into Lebanon.
Iran reportedly struck a Kuwaiti air base, while the US carried out what it described as “self-defense strikes” on Iranian radar systems and drone command-and-control sites.
US President Donald Trump said that “it will all work out well in the end,” even as military activity continued on both sides.
The fragile ceasefire between Iran and the US has repeatedly come under pressure amid continued retaliatory attacks, even as officials from both nations attempt to negotiate an end to the conflict.
Strait of Hormuz disruption keeps oil market on edge
The extended disruption in the Strait of Hormuz is expected to play a crucial role in determining the future direction of oil prices. The conflict has disrupted the movement of oil tankers through the Persian Gulf, affecting crude supplies to customers across the world.
Countries such as India, which import a large share of their crude oil through the Strait of Hormuz, have been particularly impacted.
The Iran conflict and the dual blockade around Hormuz have severely disrupted global energy markets, forcing several Middle Eastern producers to halt millions of barrels per day of crude output.
Higher crude prices have also strengthened expectations that the US Federal Reserve could keep interest rates elevated for longer in 2026, pushing bond yields to multi-year highs.
Despite Monday’s sharp rebound, both Brent and WTI crude had ended last week with losses of 11.1% and 9.6%, respectively, marking their worst weekly performance since mid-April.
Both benchmarks also ended May sharply lower by more than 17%, although they still remain up to 40% above levels seen before the conflict began in late February.
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