Oil prices surged sharply on Monday as renewed tensions between the United States and Iran rattled global markets and disrupted investor confidence.
Crude futures rose by about seven per cent after reports emerged that Iran had suspended negotiations with Washington through mediators, following escalating military exchanges and a breakdown in ceasefire discussions.
The Iranian news agency Tasnim reported that the suspension of talks was linked to renewed clashes and deteriorating conditions in Lebanon, where conflict has intensified in recent weeks.
Market analysts warned that the collapse in diplomatic progress has significantly increased the risk of a wider regional conflict, pushing energy markets into a more volatile phase.
“Hopes of further progress in US-Iran talks have been dashed… this has duly resulted in a spike for oil prices, since the combination of this and the weekend’s exchange of fire dramatically raises the chances of a fresh round of conflict,” said Chris Beauchamp, chief market analyst at IG.
Tensions have been building since strikes involving the United States, Israel, and Iran earlier in the year, which contributed to instability around the Strait of Hormuz—a critical global shipping route for oil and liquefied natural gas.
Although a ceasefire has largely held since April, maritime traffic through the strategic waterway remains limited, raising concerns about global supply constraints.
Analysts noted that oil stockpiles are being drawn down rapidly, while expectations that supply routes would reopen in the coming months are fading.
“No such opening is in sight, and each day brings the crunch point closer,” Beauchamp added.
The surge in oil prices weighed heavily on global equities, particularly in the United States, where Wall Street opened lower despite earlier expectations of gains.
The S&P 500 and Nasdaq Composite briefly recovered into positive territory, supported by strong performance in major technology stocks.
Nvidia led gains after unveiling a new AI-focused laptop chip in Taiwan, reinforcing investor enthusiasm for artificial intelligence-driven growth in the tech sector.
The new RTX Spark chips are designed to power next-generation personal computers capable of running advanced AI applications and autonomous digital assistants.
The announcement helped sustain momentum in AI-related equities across Asian markets, where technology shares posted strong gains.
South Korea’s market led regional performance, with the benchmark index rising more than four per cent. Samsung Electronics surged over nine per cent, while SK Hynix also posted gains amid optimism over global semiconductor demand.
“Investors continue to embrace the AI boom,” said independent markets analyst Stephen Innes.
Despite strong gains in technology stocks, broader European markets closed lower, reflecting concerns over rising energy costs and geopolitical instability.
The US dollar strengthened against major currencies as investors moved toward safer assets amid heightened uncertainty.
In the aviation sector, EasyJet shares climbed more than nine per cent after reports emerged of a potential takeover interest from US private equity firm Castlelake.
The firm, which already holds a minority stake in the airline, confirmed it was considering a possible offer, describing the move as “opportunistic.”
The combination of geopolitical tension, rising energy prices, and shifting investor sentiment continues to shape global markets, with analysts warning that volatility may persist in the near term.
