Oil markets surged back into volatility Monday, with benchmark crude futures jumping over 6% in early Asian trading as fears grew that the fragile two-week-old U.S.-Iran ceasefire is already unraveling.
Brent crude, the global benchmark, climbed $5.51, or 6.1 percent, to $95.89 a barrel by 0752 GMT. U.S. West Texas Intermediate futures rose $5.46, or 6.5 percent, to $89.31.
The sharp rebound came just 72 hours after both contracts suffered their steepest one-day plunge since April 18 — a 9 percent wipeout on Friday triggered by Tehran’s announcement that commercial shipping lanes through the Strait of Hormuz would remain open for the duration of the truce.
The reversal was swift and brutal. Within 24 hours of Iran’s “completely open” declaration, tankers were already coming under fire from the Islamic Revolutionary Guard Corps, according to market participants.
“Market fundamentals are getting worse, as 10-11 million barrels per day of crude oil remain shut in,” said June Goh, analyst at Sparta Commodities. “The physical market is deteriorating day by day.”
The latest flashpoint erupted over the weekend. U.S. forces seized an Iranian cargo vessel attempting to breach the American naval blockade in the Gulf, prompting an immediate vow of retaliation from Tehran.
Iranian officials also declared they would boycott a second round of negotiations that Washington had hoped would begin before the two-week ceasefire expires later this week.
President Donald Trump, who had touted the truce as a diplomatic breakthrough, insisted over the weekend that Iran had committed to never again closing the Strait of Hormuz—the narrow chokepoint through which roughly one-fifth of the world’s daily oil supply flowed before fighting erupted almost two months ago. Yet the reality on the water told a different story.
Traffic remained largely paralyzed, with disrupted flows, longer voyage times around the Cape of Good Hope, and soaring freight and insurance costs continuing to throttle physical supply.
“The financial market is trading negotiations, improvements, and resolution while at the same time the physical market is deteriorating day by day,” noted Bjarne Schieldrop, senior analyst at SEB Research. “Physical oil flows remain constrained by disrupted flows, longer voyage times, and elevated freight and insurance costs.”
Data from shipping tracker Kpler offered a sliver of relief: more than 20 vessels—carrying crude, liquefied petroleum gas, metals, and fertilizers—successfully transited the strait on Saturday. It was the busiest single-day passage since March 1. But analysts cautioned that one day’s traffic does not a reopened waterway make, especially after reports of IRGC gunfire and the seizure of an Iranian ship.
The stakes could hardly be higher. The Strait of Hormuz has long been the most critical artery in global energy markets; any sustained closure or even persistent harassment of shipping sends ripples—and price spikes—through economies from Beijing to Brussels.
With 10-11 million barrels per day of production still offline from the broader conflict, every additional day of uncertainty tightens the physical market even as diplomats try to salvage a deal.
For now, traders are pricing in the worst-case scenario: a return to open hostilities, renewed attacks on tankers, and the very real possibility that the ceasefire collapses before negotiators can even sit down again.
Whether Monday’s dramatic rebound proves to be a one-day wonder or the start of a new leg higher will depend on what unfolds in the coming 48 hours — both in the waters of the Gulf and in the negotiating rooms that have so far failed to deliver lasting calm.
WHAT YOU SHOULD KNOW
Oil prices surged more than 6% in early Monday trading as the fragile U.S.-Iran ceasefire shows clear signs of collapse.
Repeated Iranian provocations and U.S. enforcement actions in the Strait of Hormuz — including the seizure of an Iranian cargo ship and reported IRGC attacks on tankers — have kept traffic largely halted despite Tehran’s earlier assurances of open passage.
With 10-11 million barrels per day still shut in and physical oil flows severely constrained, the physical market is deteriorating even as diplomatic talks stall, raising the risk of renewed hostilities before the two-week truce expires.
