Oil prices jumped more than 5% on Monday as concerns over the failure of a ceasefire between the United States and Iran resurfaced. Market sentiment was also weighed down by the US seizure of an Iranian cargo ship and disruptions in the Strait of Hormuz.
Brent crude futures rose $5.08 to $95.46 a barrel, while WTI rose $5.01 to $88.86 a barrel. The gains came after both benchmarks fell nearly 9% on Friday on expectations that trade routes would stabilize.
However, the situation changed rapidly when security incidents again occurred on the main route. Tensions rose when tankers were reported to be targeted, thus undermining shipping companies' confidence in returning to normal operations.
Global supplies were also affected as around 10 to 11 million barrels of oil per day are still not fully restored.
The United States also confirmed the seizure of an Iranian cargo ship that was allegedly violating sanctions, while Iran signaled retaliation.
At the same time, peace talks are at a standstill as Tehran refuses to participate in the next round, increasing geopolitical risks and global energy market uncertainty.
