Oil prices have climbed to near three-week highs as hopes for progress in US-Iran peace talks were dashed once more, following President Donald Trump's decision to cancel plans to send a negotiating team to Pakistan.
Brent Crude Surges
The cost of benchmark Brent crude continued its upward trajectory, rising 2% to just under 108 US dollars per barrel in early Monday trading. This marks a return to levels seen before the first round of peace talks began in early April.
Ceasefire talks appeared increasingly fragile after Mr Trump declared over the weekend that Washington's envoys would no longer travel to Islamabad, citing a lack of progress with Iran. Speaking to Fox News on Sunday, Mr Trump stated: "If they want, we can talk but we're not sending people."
Strait of Hormuz Remains Blocked
The US president last week indefinitely extended the ceasefire between the US and Iran, originally agreed on April 7, which had largely halted the fighting that began with joint US and Israeli strikes on February 28. However, a permanent resolution remains elusive, and the crucial Strait of Hormuz—through which one-fifth of the world's oil supplies pass—remains effectively blocked.
Oil prices had dipped below 87 dollars per barrel in mid-April when both sides indicated the waterway was open for commercial tankers. However, the Strait soon became impassable again as talks faltered, sending crude prices soaring back up.
Market Reaction
Susannah Streeter, chief investment strategist at Wealth Club, commented: "The president said negotiators would be wasting their time heading to Pakistan, and the lack of progress has hit sentiment at the start of the week. But some hopes of a resolution are being kept alive, with reports that Iran has put another proposal on the table aimed at de-escalating the conflict and potentially reopening the key Strait of Hormuz. Details are scant about the offer, and patience on both sides is clearly frayed."
The FTSE 100 Index was 11.64 points lower at 10367.44 in early trade, reflecting broader market concerns over geopolitical tensions and supply disruptions.
