BY COMFORT OGBONNA
Oil prices surged on Monday, extending recent gains as stalled diplomatic efforts between the United States and Iran and continued disruptions in a critical global shipping lane kept markets on edge. Concerns about tightening supply have intensified, pushing crude benchmarks higher and reinforcing fears of prolonged volatility in the energy market.
Brent crude futures rose by $1.35, or 1.3%, reaching $106.68 per barrel in early trading, although that marked a pullback from earlier gains of more than $2 per barrel. Meanwhile, U.S. West Texas Intermediate crude climbed 95 cents, or 1%, to $95.35 per barrel. The upward movement builds on last week’s strong performance, when Brent and WTI recorded their largest weekly gains since the beginning of the conflict, rising by nearly 17% and 13% respectively.
The latest rally comes as hopes for renewed diplomatic progress faded over the weekend. A planned trip to Islamabad by U.S. envoys Steve Witkoff and Jared Kushner was abruptly canceled by President Donald Trump, dampening expectations of meaningful negotiations. This development occurred even as Iran’s Foreign Minister Abbas Araqchi arrived in Pakistan, signaling a lack of coordination and further complicating the already fragile geopolitical situation.
Market analysts point to escalating rhetoric from Washington as a major factor driving prices higher. Recent statements from President Trump, including a warning about potential military action against Iranian vessels suspected of laying mines in the Strait of Hormuz, have heightened fears of direct confrontation. Such comments have contributed to what analysts describe as an increasing “war premium” in oil markets, where prices rise in anticipation of potential supply disruptions caused by conflict.
The Strait of Hormuz, one of the world’s most strategically important chokepoints for oil transportation, remains at the center of the crisis. Iran has significantly restricted access through the strait, while the United States has imposed a blockade on Iranian ports. As a result, tanker traffic has slowed dramatically. Data from shipping analytics firm Kpler indicated that only one oil products tanker entered the Gulf on Sunday, underscoring the severity of the disruption.
This bottleneck has amplified concerns about global supply shortages, especially given the region’s critical role in energy exports. The Middle East accounts for a substantial share of the world’s oil production, and any sustained disruption in shipments through the Strait of Hormuz can have far-reaching consequences for global markets.
In response to these developments, Goldman Sachs has revised its oil price outlook for the fourth quarter, projecting Brent crude at $90 per barrel and WTI at $83 per barrel. The bank cited reduced output from the Middle East and the ongoing geopolitical uncertainty as key drivers behind the upward revision.
Analysts at the firm also warned that the broader economic implications could extend beyond crude prices alone. Elevated refined product prices, potential shortages, and the sheer scale of the current supply shock could pose significant risks to global economic stability. The combination of constrained supply and heightened geopolitical tension has created an environment where energy markets remain highly sensitive to any new developments.
As the situation continues to evolve, traders and policymakers alike are closely monitoring both diplomatic signals and shipping activity in the region. With tensions still high and no immediate resolution in sight, the oil market appears poised to remain volatile in the near term, with prices likely to respond sharply to any shifts in the geopolitical landscape.