Oil prices moved higher by more than 1% on Monday as diplomatic efforts between the United States and Iran lost momentum, while constrained flows through the Strait of Hormuz continued to tighten global supply.
Brent crude futures gained $1.35, or 1.3%, to $106.68 a barrel by 04:53 GMT, after paring earlier gains of more than $2. U.S. West Texas Intermediate crude rose 95 cents, or 1%, to $95.35 a barrel.
Both benchmarks recorded strong advances last week, with Brent up nearly 17% and WTI rising about 13%, marking their biggest weekly gains since the conflict began.
Hopes for renewed negotiations faded over the weekend after Donald Trump cancelled a planned trip to Islamabad by envoys Steve Witkoff and Jared Kushner, even as Iranian Foreign Minister Abbas Araqchi arrived in Pakistan.
“President Trump’s recent post on Truth Social, urging to shoot and kill any Iranian boat laying mines in the Strait of Hormuz, alongside his claims of having full control over Hormuz, has continued to fuel elevated war premiums,” said Priyanka Sachdeva, analyst at Phillip Nova.
Iran has largely shut the strait, while the United States has imposed a blockade on Iranian ports. Shipping activity remains restricted, with Kpler data showing that only one oil products tanker entered the Gulf on Sunday.
Goldman Sachs lifted its fourth-quarter oil price forecasts, projecting Brent at $90 per barrel and WTI at $83, citing reduced supply from the Middle East.
“The economic risks are larger than our crude base case alone suggests because of the net upside risks to oil prices, unusually high refined product prices, products shortages risks, and the unprecedented scale of the shock,” analysts led by Daan Struyven said in a note on Sunday.
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