Brent crude futures rose more than 2% to $107.55 per barrel in Asian trading Monday morning. The spike came after President Donald Trump on Saturday cancelled plans to send U.S. envoy Steve Witkoff and Jared Kushner to Islamabad, Pakistan for negotiations with Iran.
The collapse marks the latest setback in ending a conflict that has carried about 20% of daily global oil and liquefied natural gas supplies until the war began at the end of February. For two months now, the world's most critical energy chokepoint has been effectively closed.
Trump Kills Talks Before They Start
"Too much time wasted on traveling, too much work! Besides which, there is tremendous infighting and confusion within their 'leadership,'" Trump wrote in a post on Truth Social. "Nobody knows who is in charge, including them," the president said.
The abrupt cancellation came after Iranian Minister of Foreign Affairs Abbas Araghchi departed Islamabad before any direct engagement could take place between the sides. Araghchi arrived in Russia's Saint Petersburg on Monday for talks with Russian President Vladimir Putin.
Trump's decision to pull the plug reveals deeper issues than scheduling conflicts. Iran's president Masoud Pezeshkian told Pakistani Prime Minister Shehbaz Sharif that ongoing US actions were undermining trust and complicating paths to dialogue. Translation: Tehran thinks Washington isn't serious about peace.
The Real Problem: Nobody's Backing Down on Hormuz
Iranian officials warn that the Strait of Hormuz will "under no circumstances" return to its previous state. That's not posturing. Iran has maintained its grip on the waterway since February 28, when the conflict began.
The numbers tell the story. On Monday, just three ships were recorded crossing the waterway, a fraction of the hundreds of ships per day that would typically cross before the war. Every tanker that doesn't pass through Hormuz is another barrel that doesn't reach global markets.
While U.S. President Donald Trump extended a ceasefire between the countries following a request by Pakistani mediators, Iran and the U.S. are still restricting the transit of ships through the Strait of Hormuz. A ceasefire without open shipping lanes is like a hospital with no doctors. It doesn't solve the problem.
Markets Price in Extended Standoff
U.S. West Texas Intermediate was at $96.42 a barrel, up $2.02, or 2.14% Monday morning. The surge extends what's already been a brutal month for energy consumers. Last week, Brent and WTI gained nearly 17% and 13%, respectively, the biggest weekly gains since the start of the war.
Traders aren't just reacting to failed diplomacy. They're pricing in months more of constrained supply. Even with unilateral ceasefire extensions by the U.S., the lack of agreement from Iran and logistical hurdles mean market tightness likely persists for months.
Mike Wirth, chairman and CEO of Chevron, told "Face the Nation with Margaret Brennan" that the global energy system "has lost an incredible amount of flexibility" since the start of the Iran war. He's being polite. The system has lost 20% of its seaborne oil flow. That's not flexibility. That's capacity.
The $160 Question
Some traders are betting on catastrophe. WTI Crude Oil hitting $160 in April at 0.5% YES on prediction markets might seem like long odds. But consider this: we're already at $96, up from $67 before the war started. That's a 44% spike in two months.
If talks stay dead and Hormuz stays closed, $160 isn't fantasy. It's math.
The immediate catalyst matters less than the structural reality. Total exports of crude oil and petroleum products from the United States climbed by 137,000 barrels per day to a record 12.88 million bpd as Asian and European countries bought up supplies after disruptions tied to the Iran war. America is pumping flat out. So is everyone else. There's no spare capacity to offset a prolonged Hormuz closure.
Brent crude futures rose nearly 2% to $103.68 per barrel last Thursday. By Monday morning, we'd blown past $107. The acceleration tells you everything about market confidence in diplomatic progress.
The next move belongs to Tehran or Washington. But with "If they want to talk, all they have to do is call!!!" as Trump's latest negotiating position, don't expect breakthrough phone calls anytime soon. Iran's foreign minister is in Russia, not Pakistan. That's not where peace deals get made.