Market sentiment was ignited during the overnight session on Monday as news emerged that Iran had halted information exchanges with the United States in protest against Israeli actions, triggering a sharp jump in oil prices. At one point, the intraday gain exceeded 8%, marking a significant rebound.
In fact, before this news catalyzed the market, oil prices had already begun to stage a recovery during the Asian trading session. Over the past period, factors such as the accelerated drawdown of global crude inventories and escalating geopolitical tensions in regions including Russia-Ukraine and Israel-Lebanon have been building energy for a price rebound. The overnight announcement from Iran, indicating a strong stance that has stalled U.S.-Iran negotiations again, directly fueled market sentiment, leading to a stronger-than-expected rally. Although some gains were pared by the close, the move clearly ended the corrective phase that began in late May.
Starting from the latter part of last week, we have been highlighting that against the backdrop of ongoing global inventory drawdowns, oil prices are poised for another sharp rebound at any time, and advised against further short-selling. The prospect of a deal within a week, as mentioned, appears more like an optimistic wish. Unless the U.S. makes significant concessions on core contentious issues—which remains the most challenging aspect—it seems the reopening of the Strait of Hormuz will be further delayed. This extends the supply-demand imbalance, setting the stage for oil prices to recover from the lower end of their recent range. Market participants should pay close attention to timing and enhance risk management.
WTI crude futures settled up $4.80, or 5.49%, at $92.16 per barrel. Brent crude futures gained $3.86, or 4.24%, to close at $94.98 per barrel. INE crude futures rose 3.57% to 605.7 yuan.
The semi-official Tasnim News Agency reported that Iran's negotiation team has decided to suspend "dialogue and text exchanges through intermediaries." This decision was attributed to the ongoing Israeli military operations in Lebanon, which was a precondition for the ceasefire agreement, and the fact that ceasefires on all fronts, including in Lebanon, have been violated.
The report stated that Iranian officials demand Israel immediately halt military actions in Gaza and Lebanon. Iran also demands that Israel fully withdraw from the areas it occupies in Lebanon before negotiations can resume. Talks will not proceed until Iran's demand for Israel to stop its operations in Lebanon and Gaza is met. Furthermore, it was reported that Iran and the "Axis of Resistance" have decided to completely blockade the Strait of Hormuz. In response, other fronts, including the Bab el-Mandeb Strait, may be activated.
An Iranian Foreign Ministry spokesperson stated on Monday that the prolonged U.S.-Iran conflict stems from a lack of trust, fluctuating U.S. positions, and continued Israeli attacks in the region. He noted that negotiations have been mired in suspicion and mistrust from the start, currently remaining at the stage of information exchange without final consensus. The spokesperson pointed out that if the U.S. sees its changing statements as a negotiation tactic, it is ineffective with Iran; if it reflects internal governmental confusion, the U.S. should promptly establish a clear and unified position.
Iran believes Israel's military actions in Lebanon and elsewhere are connected to the United States. The spokesperson emphasized that achieving a comprehensive agreement to end regional conflict requires the simultaneous implementation of a ceasefire arrangement for Lebanon.
Previously, Israeli Prime Minister Benjamin Netanyahu ordered the military to resume strikes on the southern suburbs of Beirut, an area that is a stronghold of Hezbollah in Dahieh.
According to Tasnim, Yemen's Houthi group is awaiting a call from Lebanon's Hezbollah to join military action against Israel. If Israel further escalates military actions against Lebanon, the Houthis are prepared to resume aerial and maritime strikes against Israel.
The spokesperson also revealed that the two sides have not yet engaged in detailed discussions on nuclear issues, with Iran consistently holding to its core demand for the unfreezing of its overseas assets. Additionally, he accused the U.S. of attacking Iran's southern provinces, violating the ceasefire agreement and further intensifying antagonism. Iran reserves the right to take proportionate defensive actions based on the principle of self-defense.
On June 1, the Speaker of Iran's Parliament accused Israel of launching fierce attacks on Lebanon. He also accused the United States of violating the ceasefire agreement by implementing a maritime blockade and condoning Israel's escalation of hostilities. In a social media post, he stated, "Every choice has its cost, debts will be repaid sooner or later. Everything will settle in the end."
On the same day, the Iranian Foreign Ministry spokesperson stated that U.S. military "acts of aggression" against Iran violate the ceasefire agreement, and that Iran's armed forces retaliated by striking "the source of the American aggression." He added that U.S.-Iran negotiations are taking place in an atmosphere of high suspicion and distrust, with information exchange through intermediaries also occurring in the same climate of mistrust. The U.S. constantly changes its position, presents new or contradictory demands, and releases conflicting information through the media, which naturally delays the negotiation process. The spokesperson also noted that no detailed negotiations on nuclear-related matters are currently taking place; the focus of the current stage is on ending the war.
1. A survey of analysts shows that market expectations for 2026 oil prices have been raised for the third time since the outbreak of the Iran conflict in late February. Analysts pointed out that it may take months for energy supplies to fully recover to pre-conflict levels.
2. The survey forecasts that the average price for Brent crude in 2026 will be $90.44 per barrel, and for U.S. crude $84.63 per barrel, up from April predictions of $86.38 and $80.07, respectively. The latest forecasts are about 40% higher than pre-war estimates from February.
3. Since the outbreak of the U.S.-Iran conflict, benchmark oil prices hit four-year highs due to large-scale supply disruptions from the blockade of the Strait of Hormuz, but current prices remain below the historical records set in 2008. Analysts believe the likelihood of oil prices reaching new highs this year is low, with limited room for further significant increases from current elevated levels.
4. Data shows that monthly crude exports from the Middle East have dropped from about 18.3 million barrels per day before the crisis to approximately 8.8 million barrels per day currently, a decline of more than half. Surveyed analysts noted that the global oil market will face a significant supply shortfall in 2026, estimated to range between 500,000 and 8 million barrels per day.
5. OPEC forecasts global oil demand growth of 1.17 million barrels per day in 2026, while the U.S. Energy Information Administration expects a decline of about 420,000 barrels per day. Meanwhile, there are reports that major OPEC+ producers may agree to a slight increase in production for July, but analysts believe that with export routes obstructed, production policy is largely symbolic.
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