Oil prices jumped nearly seven percent Monday as the United States and Iran careened toward renewed open conflict, with weekend attacks on commercial shipping, a seized Iranian vessel and a collapsing ceasefire combining to erase the brief optimism that had sent crude prices crashing just 72 hours earlier.
West Texas Intermediate futures rose to $89.53 a barrel by early Monday morning New York time. International Brent crude advanced 6.2 percent to $96.05. The moves reversed a significant portion of Friday’s historic drop, which had followed Iran’s declaration that the Strait of Hormuz was open to commercial traffic — an announcement that lasted less than 48 hours before Tehran reimposed restrictions and the shooting started again.
Warren Patterson, head of commodities strategy at ING, captured the market’s whiplash with clinical precision. “Oil prices are being whipsawed by developments in the Middle East once again, with what appears to be de-escalation quickly turning to re-escalation,” he wrote in a Monday research note. The observation understated the speed of the reversal — it took less than two days to move from an eleven percent crude crash to a seven percent surge, with a ship seizure and multiple vessel attacks packed into the interval.
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The sequence that produced Monday’s spike began Saturday when Iranian Revolutionary Guard gunboats fired on a tanker in the Strait of Hormuz. A container ship was separately struck by an unknown projectile in the same period, according to the United Kingdom Maritime Operations Centre. On Sunday, the US Navy responded by firing on the Iranian-flagged Touska in the Gulf of Oman after the vessel attempted to breach the American naval blockade of Iran’s ports. US Marines subsequently boarded and seized the ship. Trump described the operation on Truth Social, noting that the Navy had stopped the Touska “right in their tracks by blowing a hole in the engine room.”
Iran called the seizure armed piracy and a ceasefire violation. It then announced it would not attend a second round of peace negotiations in Islamabad — directly citing the blockade as the reason. Trump said Monday that talks were scheduled to proceed regardless. The two accounts could not both be true.
The ceasefire agreement between the two countries expires this week, and Trump called Iran’s weekend attacks on commercial vessels a “total violation” of its terms. He renewed his threat to destroy every power plant and bridge in Iran if its leaders do not accept a deal, language that markets have learned to price into crude futures whenever it surfaces. Whether the threats translate into resumed strikes or serve primarily as negotiating pressure has been the defining interpretive challenge of the conflict’s entire diplomatic dimension.
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Friday’s collapse and Monday’s recovery trace a pattern that has been repeating since the war began — a diplomatic signal moves markets sharply in one direction, conditions on the ground reverse the signal, prices swing back. The net effect has been crude trading in a volatile band well above pre-war levels, with every announcement of progress generating a short-lived drop and every subsequent escalation reclaiming it.
The Friday announcement that briefly sent oil below $84 a barrel followed Iran’s declaration that the strait was completely open. What emerged within hours was that Tehran intended to maintain the same conditions for transit it had been imposing throughout the conflict — a coordinated route managed by Iranian military authorities, with unresolved questions about transit fees. Trump refused to lift the naval blockade in response. Tehran reversed the opening. The Revolutionary Guard gunboats went back to work on Saturday.
The ceasefire that was supposed to create space for the Islamabad negotiations to produce a durable framework has instead produced the Touska seizure, Iran’s withdrawal from the talks and a strait where no tankers are moving. The diplomatic machinery that Pakistan assembled to host a second round of negotiations is prepared for a meeting that at least one of the parties says will not happen.
Whether Iran ultimately sends negotiators to Islamabad, or whether Trump extends the ceasefire beyond its expiration date, or whether the resumed attacks on commercial shipping escalate into something that makes both questions academic — those are the variables that will determine where oil prices go from $89.53, and what the world’s energy markets look like when this week ends.