Tensions in the Middle East have intensified further and continue to disrupt global markets as efforts to revive peace talks on the Iran conflict have stalled and the critical Strait of Hormuz remains effectively closed. This has driven international oil prices higher while gold prices have declined. Brent crude futures rose as much as 2.5% to $107.97 per barrel, while West Texas Intermediate traded near $96 per barrel. Gold prices fell up to 0.6%, to around $4,680 per ounce, extending last week's 2.5% decline. The U.S. President called off a planned weekend trip to Pakistan by his senior envoys, who were tasked with mediating talks. Concurrently, Iran stated it would not engage in negotiations while under threat. Although a ceasefire has largely held since early April, blockades imposed by both the U.S. and Iran have rendered this key energy chokepoint practically impassable. This supply shock has severed flows of crude oil, fuel, natural gas, and even fertilizers, raising concerns about an inflationary crisis. "The Strait remains heavily blockaded, with traffic at a standstill," said the Director of the Middle East Program at the Center for Strategic and International Studies. "For now, neither side appears to want a return to full-scale conflict. We are in a kind of stalemate, a purgatory." On Saturday, the President instructed his envoys to cancel their trip to Pakistan, later telling reporters that Iran had "offered a lot, but it's not enough." Iran's President stated that his country would not accept "negotiations imposed under threat or blockade." Now in its ninth week, the conflict has driven up energy prices, caused shortages of key products like liquefied petroleum gas in countries such as India, and prompted airlines to reduce flights. The International Energy Agency described the situation as creating "the largest supply shock in history." The Director of Energy Futures at Mizuho Securities noted, "Oil is moving into a consolidation range above $100. With each passing day, the likelihood of a near-term agreement diminishes." According to traders, the longer the Strait remains closed, the more demand will need to be adjusted downward to adapt to a supply reduction of at least 10%. The loss of one billion barrels of crude is almost certain—more than double the emergency stockpiles released by governments after the conflict began—and demand destruction could spread further. As part of the blockade operations, U.S. forces intercepted a sanctioned vessel in the Arabian Sea on Saturday. A naval helicopter was deployed to intercept the ship, which subsequently complied with military instructions and returned to Iran under escort. Since the blockade began, a total of 37 vessels have been diverted, according to U.S. Central Command. Most of Iran's crude exports go to China, where private refiners, often referred to as "teapot" refineries, are taking advantage of the lower-priced oil. Last Friday, the U.S. imposed sanctions on a Chinese petrochemical company for its alleged links to Tehran. The company has denied any trade dealings with Iran.
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