Oil prices surge as US-Iran talks stall amid rising tensions

Oil prices have climbed higher amid stalled peace talks between the United States and Iran. Brent crude rose more than 2 percent on Sunday after hopes for a second round of ceasefire negotiations between Washington and Tehran unraveled over the weekend. As of 1:30 GMT, Brent, the primary benchmark for global prices, stood at $106.99.

US President Donald Trump canceled a planned trip to Pakistan by his envoys, Steve Witkoff and Jared Kushner, after Iranian Minister of Foreign Affairs Abbas Araghchi departed Islamabad before any direct engagement could take place. Araghchi arrived in Russia’s Saint Petersburg on Monday for talks with Russian President Vladimir Putin and other officials as Tehran seeks a way out of the diplomatic impasse. This trip follows a visit to Oman, indicating Tehran's attempts to explore alternative diplomatic avenues.

As US and Iranian negotiators struggle to break the deadlock, Tehran’s threats against commercial shipping in the Strait of Hormuz have reduced traffic significantly, paralyzing a large portion of the world’s supply of oil and natural gas. On Saturday, only 19 commercial vessels transited the strait, which normally carries about one-fifth of global oil and natural gas supplies, according to maritime intelligence platform Windward. Before the US and Israel launched their war on Iran in late February, the waterway saw an average of 129 daily transits, according to the United Nations Trade and Development.

Power Read: The stalled negotiations have heightened tensions and uncertainty in the oil market, giving leverage to Iran as it threatens shipping routes critical to global energy supplies. The US's inability to secure a diplomatic resolution exposes its strategic vulnerabilities, particularly as Tehran seeks support from Russia. This dynamic could lead to increased volatility in oil prices and further complicate international energy security.

What to watch: The upcoming decisions by US and Iranian officials regarding the continuation of ceasefire negotiations and any potential engagement with Russia will be crucial.