Oil prices rose significantly at the market open following US President Donald Trump's threats to restart war with Iran, even as Vice President JD Vance met with Iranian officials in Switzerland for peace talks. Brent crude climbed as much as 2.2% to $82.30 a barrel, while West Texas Intermediate (WTI) was near $77 a barrel. This surge reversed a previous downtrend that had seen oil prices fall to levels not seen since the war began on February 28, with President Trump noting the interim peace deal was to avert a global economic depression from high oil prices.
The talks, held in the Qatari-owned Swiss mountaintop resort of Buergenstock, are the first under a memorandum of understanding (MOU) agreed to last week, which aimed to end the war and extend a ceasefire from April for at least another 60 days. The MOU called for reopening the Strait of Hormuz, a critical choke point for global energy shipments, and ending hostilities including in Lebanon. However, on Sunday, Iran announced it had again closed the Strait, citing the US's failure to halt fighting in Lebanon, although US officials disputed this, and commercial shipping data showed an immediate impact.
Despite an initial report from Iranian media that talks were halted due to Trump's threats, officials familiar with the matter confirmed that negotiations were ongoing into early Monday. US Vice President JD Vance stated that "great progress" had already been made. The discussions are expected to cover de-escalation mechanisms to ensure the Strait of Hormuz remains open, enforcement of the ceasefire between Israel and Hezbollah in southern Lebanon, Iran's nuclear program, and economic relief for Tehran, including the unfreezing of billions of dollars in Iranian assets overseas.
Iran's decision to close the Strait of Hormuz for the second time, whose previous four-month closure caused the biggest disruption to global energy supplies in history, occurred over the weekend when markets were closed, delaying its full impact on oil prices until Monday. This move, along with Trump's threats, has created a tense atmosphere for the peace talks, with investors closely watching for further developments that could affect global energy markets and the broader economy.
Before the current talks, the US had lifted a naval blockade on Iranian ports and promised sanction waivers for Iranian crude sales under the memorandum, with Iran pledging to reopen Hormuz. However, Iran now demands commercial ships obtain its permission and mandatory insurance to cross the Strait, a condition the US, Europe, and Gulf Arab states have rejected.
