Oil prices surge as Iran suspends US-mediated talks; global markets turn cautious

Crude futures jumped around 6–7 per cent, with Brent crude climbing close to the USD 95–97 per barrel range in early trade. Representational pic

Global oil prices surged sharply on Monday after Iran suspended indirect negotiations with the United States (US) via mediators, triggering fresh concerns over supply disruptions from the Middle East and escalating geopolitical tensions.

Crude futures jumped around 6-7 per cent, with Brent crude climbing close to the USD 95-97 per barrel range in early trade, as markets reacted to reports that Tehran had halted dialogue over Israel's expanding military operations in Lebanon.

According to Iranian news agency Tasnim, the decision was taken in response to continued Israeli strikes and what Tehran described as violations linked to ceasefire conditions. Iran has demanded an immediate halt to Israeli operations in Gaza and Lebanon, along with the withdrawal of forces from occupied areas in northern Lebanon, before any talks can resume.

The developments come at a time when the US and Iran had been engaged in indirect talks aimed at ending the wider West Asia conflict and addressing issues linked to Iran's nuclear programme and regional security arrangements. However, progress has stalled amid repeated military escalations.

Market sentiment was further hit by concerns over potential disruption to key global shipping routes, including the Strait of Hormuz and Bab al-Mandab Strait, after Iranian reports suggested escalation options remain on the table.

The geopolitical uncertainty triggered a broader risk-off sentiment across global markets. Equities came under pressure in early trade, although technology stocks showed some resilience due to gains in select AI-linked counters.

Global markets turn cautious as oil spike fuels inflation fears

In the US, Wall Street opened lower before recovering partially, while European markets ended in the red as investors weighed the impact of rising energy costs on inflation and interest rate expectations.

Analysts said the oil spike reflects renewed fears of supply tightening at a time when global inventories remain under pressure, adding that markets are highly sensitive to any escalation in the Iran-Israel-US triangle.

Safe-haven demand also strengthened the US dollar, while bond yields edged higher as investors priced in potential inflation risks linked to higher crude prices.

Meanwhile, Asian markets saw mixed trends, with some semiconductor-heavy indices supported by strong earnings-linked optimism even as broader sentiment remained cautious.

(With AFP inputs)