Oil prices surged sharply on Monday after Iranian state media reported that Tehran had suspended its talks with the United States, dashing hopes that a framework deal to end the war could be agreed in the coming days. Iran cited Israel’s continuing strikes on Lebanon as the trigger and warned that the “complete closure of the Strait of Hormuz” was back on the agenda.
Brent crude, the global benchmark, jumped about 6 percent to trade at $97.02 a barrel shortly before 10 a.m. Eastern Time, while US West Texas Intermediate climbed roughly 7.5 percent to $93.93 a barrel for July delivery. The moves come after hopes for a US-Iran deal had pulled Brent down 19.3 percent in May — its biggest monthly fall since the start of the Covid-19 pandemic, according to Deutsche Bank — though prices remain well below the $114 high settled on April 5.
Iran’s semi-official Tasnim news agency said the negotiating team was suspending “talks and exchanges of texts through mediators” in protest over what it called the violation of Lebanon as a ceasefire precondition. “Given the continuation of the Israeli regime’s attacks in Lebanon, and considering that Lebanon had been one of the preconditions for a ceasefire — which has now been violated on all fronts, including Lebanon — the Iranian negotiating team is suspending talks,” Tasnim quoted officials as saying. Tehran demanded an immediate halt to Israel’s wars in Gaza and Lebanon and a full Israeli withdrawal from Lebanon, adding that “until Iran’s and the resistance’s position on these matters is satisfied, there will be no negotiations.”
Tasnim said Tehran and allied groups had placed on their agenda the “complete closure of the Strait of Hormuz and the activation of other fronts,” including the Bab el-Mandeb strait off Yemen, where Houthi forces have previously attacked passing vessels. A renewed Hormuz closure would land squarely on Sri Lanka’s fuel-import chain, which moves the country’s crude through the strait; the Iran war has already driven CPC’s monthly crude bill past US$886 million in April and pushed Ceylon Petroleum into reported losses of Rs.129 per litre of diesel — both pressures that would intensify if Hormuz shuts.
Earlier on Monday, Israeli Prime Minister Benjamin Netanyahu ordered Israeli strikes on Beirut’s Dahieh district — a Hezbollah stronghold in the southern suburb — in a move an Israeli official told CNN had been coordinated with Washington. The Lebanon front had been a key sticking point in the framework agreement Trump’s negotiating team has tried to finalise since the May 28 outline, with the President asking for a third round of edits to the text on Sunday covering Hormuz wording and the removal of Iran’s highly enriched uranium stockpile. The suspension comes despite US bombings of Iranian air defences at Geruk and Qeshm over the weekend and Iran’s retaliatory drone-and-missile strike on a US base in Kuwait — exchanges Washington had framed as compatible with the fragile ceasefire.
“Anything under $100 a barrel is pricing a good outcome,” Saxo Bank strategist Neil Wilson wrote in a note cited by CNN.
