Oil prices moved higher in Asian trading after a weekend of diplomatic engagement was overshadowed by a fresh escalation in geopolitical rhetoric and a reported closure of a key shipping chokepoint.
As of 19:58 ET (23:58 GMT), Brent futures for August delivery rose 1.4% to $81.69 per barrel, while West Texas Intermediate (WTI) crude futures gained 3% to $78.93 per barrel. Both contracts had dropped almost 10% during the previous week on optimism tied to the interim peace agreement between the U.S. and Iran.
The immediate price rebound followed two closely linked developments. First, Tehran announced it had again closed the Strait of Hormuz, citing continued Israeli military operations in Lebanon and saying Washington had not met commitments connected to the interim accord. Second, U.S. President Donald Trump issued a social media warning aimed at Iran, saying: "Iran must immediately stop their highly paid PROXIES in Lebanon from causing trouble. If they don’t, we’ll hit Iran very hard again, just like we did last week, only harder!!!"
Traders interpreted those signals as a reminder that the diplomatic track remains fragile and that geopolitical risk has returned to crude markets. That assessment prompted market participants to rebuild a risk premium that had been pared back when the interim agreement raised hopes for resumed shipping through the Strait of Hormuz and increased Iranian oil flows to global markets.
The closure of the strait was announced despite the first direct U.S.-Iran talks held over the weekend under a 60-day interim peace agreement. Delegations met in Switzerland, in discussions mediated by Qatar and Pakistan. Participants included U.S. Vice President JD Vance and senior Iranian officials. Agenda items reported from the meeting included sanctions relief, maritime security and a framework for future negotiations on Iran's nuclear programme.
Earlier in the month, crude had plunged on expectations that the interim deal would ease shipping constraints through Hormuz and eventually allow more Iranian barrels to enter the market. Last week Brent slid to a three-month low near $79 a barrel after details of the accord were revealed. The recent statements and the strait closure have reversed some of those sharp losses as traders reassess near-term supply risk.
Investors and market participants are now watching whether negotiators can preserve the nascent peace process in the coming days. The persistence of military activity in Lebanon, uncertainties around compliance with commitments tied to the interim deal, and public threats of renewed U.S. military action were cited in market moves and commentary.
Market context - Prices had been pressured by earlier optimism over the 60-day interim agreement, which had prompted expectations of restored shipping through Hormuz and eventual increased Iranian exports. The recent developments have reintroduced concerns about supply disruption and geopolitical escalation.
Near-term focus - Traders will be monitoring follow-up diplomatic engagements, any changes to the status of shipping through the Strait of Hormuz, and public statements from involved governments that could influence oil market risk premia.