Oil climbs as US-Iran talks stall and Strait of Hormuz stays shut

Oil prices rose for a third consecutive session on Monday after optimism for a diplomatic breakthrough between the United States and Iran evaporated over the weekend, leaving the Strait of Hormuz largely closed to normal traffic. Brent crude climbed above $73 a barrel in early European trading as traders priced in a prolonged disruption to one of the world’s most critical energy chokepoints.

President Donald Trump dampened hopes of a swift agreement, telling reporters the US was "low-keying it" with Tehran and that the two sides were "only semi-negotiating". He added: "We are just watching Iran with its huge inflation and the fact they have no money." The remarks signalled a hardening of the US posture just as Israel rejected a 15-point Gaza proposal drafted by the White House. Prime Minister Benjamin Netanyahu said the Israeli military "will not carry out any withdrawal until Hamas is genuinely disarmed".

Iran demands concessions for full reopening

The Institute for the Study of War said Tehran is using both "messaging and force to signal its continued intent" to control traffic through the strait. Senior Iranian officials have linked any full reopening to a package of demands: sanctions relief, the lifting of a US naval blockade, the withdrawal of American troops from bases surrounding Iran, and the release of frozen assets. The ISW noted the blockade is "imposing high costs on Iran’s oil exports and broader economy", but the pressure has not yet forced a shift in Tehran’s position.

Iran and Oman are close to agreeing on a temporary transit route through the strait, which would be for select vessels, but emphasised that a full reopening of the waterway was subject to "other conditions".

Iranian Foreign Minister Abbas Araghchi said over the weekend that a temporary transit arrangement with Oman for select vessels was near, but he stressed a full reopening remained conditional. The limited corridor would do little to ease the backlog of tankers or restore normal flows.

Markets brace for extended uncertainty

With neither side showing willingness to blink, analysts expect the risk premium in oil to persist. The FTSE 100 opened lower as energy gains failed to offset broader risk-off sentiment. Investors are now watching for any signal from the International Atomic Energy Agency or back-channel talks in Muscat that could break the deadlock. Until then, the strait remains a flashpoint where a single miscalculation could spike prices sharply.