Summary Oil prices rise nearly 2% as US–Iran talks stall and Strait of Hormuz flows stay limited, tightening global supply and raising concerns about shortages and economic risks
SINGAPORE (Reuters) - Oil prices extended gains on Monday, rising nearly 2% as peace talks between the U.S. and Iran stalled while shipments through the Strait of Hormuz remained limited, keeping global oil supplies tight.
Brent crude futures rose $2.16, or 2.05%, to $107.49 a barrel by 2346 GMT, the highest since April 7, and U.S. West Texas Intermediate was at $96.17 a barrel, up $1.77, or 1.88%.
Last week, Brent and WTI gained nearly 17% and 13%, respectively, the biggest weekly gains since the start of the war.
Hopes of reviving peace efforts receded during the weekend when U.S. President Donald Trump scrapped a planned trip to Islamabad by his envoys Steve Witkoff and Jared Kushner, even as Iranian Foreign Minister Abbas Araqchi arrived In Pakistan.
"This move puts the ball squarely back in Iran’s court, and the clock is now ticking loudly," IG market analyst Tony Sycamore said in a note, adding that Tehran may be forced to shut production at its aging oil fields when it runs out of storage capacity.
Tehran has largely closed the strait while Washington has imposed a blockade of Iran's ports. Traffic through the Strait of Hormuz remained limited, with just one oil products tanker entering the Gulf on Sunday, shipping data from Kpler showed.
Goldman Sachs raised its oil price forecasts for the fourth quarter to $90 a barrel for Brent crude and $83 for WTI citing reduced output from the Middle East.
"The economic risks are larger than our crude base case alone suggests because of the net upside risks to oil prices, unusually high refined product prices, products shortages risks, and the unprecedented scale of the shock," GS analysts led by Daan Struyven said in an April 26 note.
