Oil Surges Over 8% to $102 as US-Iran Talks Collapse

Crude oil prices jumped past $100 a barrel after failed diplomatic efforts to end the seven-week war in the Middle East prompted a threat from President Donald Trump to blockade a critical energy chokepoint.

Brent crude futures surged more than 8 percent to $102 a barrel after peace talks between the US and Iran collapsed, with President Donald Trump threatening a full blockade of the Strait of Hormuz in response.

"We need to see an affirmative commitment that they will not seek a nuclear weapon," Vice President JD Vance, who led the U.S. delegation in Pakistan, said after 21 hours of negotiations ended without an agreement.

The flight to safety was immediate, with West Texas Intermediate crude also climbing to about $105 a barrel. The move rattled equity markets, with futures on the S&P 500 falling roughly 1 percent ahead of Monday's open.

The escalation puts the global oil supply at further risk, as nearly 20 percent of the world's oil passes through the Strait of Hormuz. A prolonged blockade could push oil prices toward $150 a barrel, according to some experts, further fueling global inflation and complicating monetary policy for central banks.

In a social media post on Sunday, President Trump said he had ordered the U.S. Navy to "begin the process of BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz." U.S. Central Command later clarified that the blockade would only target vessels traveling to and from Iranian ports, a move the Trump administration believes could compel China, which receives nearly half its oil imports through the strait, to pressure Tehran.

The breakdown in talks came after a fragile two-week ceasefire. U.S. officials cited Iran's refusal to abandon its nuclear program as the primary sticking point. Iranian officials, led by Parliament Speaker Mohammad Bagher Qalibaf, blamed the U.S. for the failure, stating Washington had not done enough to gain their trust.

The blockade directly challenges China, a key trading partner for Iran. While Beijing helped broker the initial ceasefire, its reaction to the blockade remains uncertain. "Keeping the area safe and stable and ensuring unimpeded passage serves the common interest of the international community," a Chinese official said last week, striking a neutral tone.

The conflict, which began in February, has already had a significant economic impact. Global oil prices have soared, pushing the national average for gasoline in the U.S. above $4 a gallon, according to the AAA motor club. The latest surge in crude prices will likely keep prices at the pump elevated, adding to consumer costs and inflation concerns.

This article is for informational purposes only and does not constitute investment advice.