New York, June 1, 2026, 12:02 (ET)
- Brent and U.S. crude rose after Iran’s Tasnim news agency reported Tehran had cut off indirect talks with Washington via mediators.
- The Strait of Hormuz, a tight oil and gas route, was back in focus for the market after the move.
- The rally came even as demand out of China and Europe looked soft, leaving traders with a two-sided risk.
Brent jumps near $100 as Iran talk stops, Strait threat looms
Oil rallied Monday, with Brent crude close to $100 a barrel after Iran’s Tasnim news agency said Tehran stopped messaging the U.S. and Iran-backed groups could block the Strait of Hormuz and other routes. Brent futures gained $6.02, or 6.6%, to trade at $97.14 a barrel at 10:02 a.m. ET. U.S. West Texas Intermediate crude added $6.68, up 7.7%, to $94.04.
Timing was key. Oil closed out May with its steepest dollar drop since March 2020 after optimism over a possible U.S.-Iran ceasefire extension and concerns about sluggish demand weighed on prices. But by Monday, the market swung higher, quickly reacting to renewed supply risks as ceasefire talks looked shaky.
Hormuz isn’t just any sea route. The International Energy Agency puts crude and oil product flow through the strait at about 20 million barrels per day in 2025, or roughly a quarter of all seaborne oil trade. Not many ways to go around it.
Tasnim reported Iran’s negotiators are stopping indirect talks with Washington over the attacks on Lebanon. The outlet also said Iran and its “Resistance Front” partners in Yemen, Lebanon, and Iraq have put a full blockade of the Strait of Hormuz and moves to open new fronts — including the Bab el-Mandeb Strait near Yemen — on their agenda. Reuters
Iran’s Foreign Minister Abbas Araqchi warned Monday that “Violation on one front is a violation of the ceasefire on all fronts,” in a post on X. He said the U.S. and Israel would bear responsibility for any breach. Reuters
Israel ramped up its ground operations in southern Lebanon, Reuters said, with troops told to push further against Hezbollah despite a ceasefire that started more than six weeks ago. According to the report, Israeli forces took control of Beaufort Castle and a key ridge. Prime Minister Benjamin Netanyahu said he directed the military to expand the offensive.
U.S. Secretary of State Marco Rubio has spoken with Lebanese President Joseph Aoun and Netanyahu about a “gradual de-escalation” plan, a U.S. official told Reuters. The proposal would see Hezbollah halt attacks on Israel, while Israel would hold back from escalating in Beirut. Washington has kept a diplomatic channel open. Reuters
Trump said Friday he’s close to making a call on whether to go ahead with a plan to keep the early-April ceasefire with Iran in place for 60 more days. But Reuters said the U.S. and Iran are still far apart on key issues. Trump repeated Monday that Tehran is pushing for a deal, according to Reuters, while Iranian officials said the U.S. keeps changing its position.
Physical flows, not just the news, are what traders are focused on. Tony Sycamore, analyst at IG, said concern is picking up over mines in the Strait of Hormuz. “Even if an agreement is reached, it won’t deliver a flood of supply,” Sycamore said. Reuters
There’s a counterbalance. China’s official manufacturing purchasing managers’ index slipped to 50 in May from 50.3 in April, right at the expansion-contraction mark. New export orders also eased. Goldman Sachs analysts said oil demand from end-users could have dropped more than expected as high prices hit jet fuel, petrochemicals and fuel use in parts of China and Western Europe.
OPEC+ members look set for a fresh output target hike in July, according to three Reuters sources, but some Gulf nations have missed earlier increases due to the Hormuz disruption. Saudi Arabia is seen cutting its July official selling price for Asia again, the second month in a row, as a Reuters poll signaled weaker regional demand.
The risk is both things happen: demand slows and holds prices back, while conflict keeps supply squeezed. Kazakhstan said Monday it brought output back online after Tengiz disruptions, but that’s minor compared with any lasting Gulf export problems.
