Crude oil prices jump above $81 per barrel as Hormuz disruptions, fragile U.S.-Iran talks revive supply fears

Crude oil prices climbed on Monday as renewed disruptions in shipping through the Strait of Hormuz and a tense start to US-Iran negotiations reignited concerns over global supply security, reversing some of the sharp losses recorded last week.

Global benchmark Brent crude rose 0.67%, or 54 cents, to $81.11 a barrel in early trade after touching an intraday high of $82.30. US West Texas Intermediate (WTI) crude gained more sharply, with the front-month contract rising 2.64% to $78.62 a barrel ahead of its expiry.

The latest gains came after shipping data indicated a significant decline in vessel movements through the Strait of Hormuz on Sunday following Iran's announcement that it had once again restricted traffic through the strategic waterway. The narrow channel handles a substantial share of the world's seaborne crude exports and remains a critical artery for energy supplies from the Gulf region.

Market participants had expected the reopening of the strait following last week's interim peace agreement between Washington and Tehran. However, analysts said those expectations now appear premature.

Geopolitical backdrop remains tense

The geopolitical backdrop remained tense despite the launch of formal negotiations between US and Iranian officials in Switzerland. Talks aimed at securing a permanent end to the Iran conflict began on Sunday but quickly encountered obstacles after US President Donald Trump warned that Washington could resume military action against Iran if tensions escalated.

Iranian officials responded sharply to the comments, while also linking the success of the broader negotiations to a cessation of hostilities in Lebanon. Although mediators from Pakistan and Qatar announced the creation of a "de-confliction cell" involving the Lebanese government to help enforce a ceasefire, fighting between Israel and the Iran-backed Hezbollah movement remains a major sticking point.

The talks mark the beginning of a 60-day diplomatic process intended to reach a lasting settlement of the conflict, address concerns surrounding Iran's nuclear programme and ensure uninterrupted navigation through the Strait of Hormuz.

The rebound in oil prices follows a steep decline of more than 8% last week, when traders anticipated a surge in supplies from cargoes stranded in the Gulf and the possible easing of US sanctions on Iranian crude exports.

Iran said more than 25 million barrels of its oil had moved past the virtual blockade zone over the past week. At the same time, major Gulf producers, including the U.A.E., Kuwait and Iraq, have increased supply offers to customers.

Iraq has also signalled plans to gradually raise crude production to between 4.2 million and 4.3 million barrels per day, potentially adding further supply to the global market.