MW Global oil prices jump 7% to top $97 a barrel after Iran reportedly suspends talks with U.S. and fully closes Strait of Hormuz
By Isabel Wang and Myra P. Saefong
The oil market will need to price in a longer conflict and a higher risk of disruption to supply without a peace deal: deVere Group
Iran will move to fully block the Strait of Hormuz.
Oil prices were surging on the first trading day of June after Iran reportedly suspended all exchange of negotiation messages with the U.S. due to continued Israeli cease-fire violations in Lebanon, dashing hopes for an imminent deal between Washington and Tehran to end the war in the Middle East.
The West Texas Intermediate crude contract for July delivery (CL.1) (CLN26) was popping 7% to $97.51 a barrel, on pace for its largest one-day gain since April 29. Brent crude's August contract (BRN00) (BRNQ26) was up 8.3% to $94.59 a barrel, on track for its best day since May 4, according to FactSet data.
The moves followed reports on Monday morning that Iranian negotiators will stop exchanging messages with the U.S. through intermediaries and that Tehran will move to fully close the Strait of Hormuz in retaliation for ongoing cease-fire violations, according to Iran's state-affiliated media outlet Tasnim.
Israeli Prime Minister Benjamin Netanyahu overnight ordered strikes on the southern suburbs of Beirut, the capital of Lebanon.
The Tasnim report suggests that the U.S. and Israel have consistently underestimated how structurally central Lebanon is to Iran's position, Hamidreza Azizi, a visiting fellow at the German Institute for International and Security Affairs in Berlin, wrote in a post on X.
"Lebanon matters to Iran both strategically and ideologically, and the pressure from the Islamic Republic's own support base to act - not just signal - on Lebanon has been building," Azizi said. "Accepting a deal while Israel continues operations there would carry serious domestic costs. That's not a detail Tehran can paper over."
The White House didn't immediately respond to a MarketWatch request for comment.
U.S. Central Command also announced early Monday morning that it had launched "self-defense strikes" on drone sites in Iran's southern region, close to the Strait of Hormuz. It also said the "measured and deliberate strikes" were in retaliation for a U.S. drone being shot down by Iranian authorities over international waters, according to a post on X.
Iran's Islamic Revolutionary Guard Corps said it targeted a U.S. air base that it claimed had been used to attack an Iranian communications tower, according to a Fars News Agency report.
The escalation in attacks on Monday dashed optimism among investors who had been hoping for an imminent peace deal to end the war in Iran. U.S. and Iranian negotiators just last week reached an agreement on a 60-day memorandum of understanding to extend the cease-fire and launch negotiations on Iran's nuclear program, but President Donald Trump has yet to give his final approval.
"We've never felt closer to a deal but potentially never felt closer to it all falling apart with isolated strikes becoming more frequent," Jim Reid, head of macroeconomic research and thematic strategy at Deutsche Bank, wrote in a note on Monday.
See: Oil prices tumble nearly 20% in May - the biggest monthly drop since 2020. Here's what's next.
"The market has been hanging on to the idea that however ugly this conflict became, there would eventually be a diplomatic off-ramp," said Nigel Green, chief executive officer at deVere Group. "Today, that's looking much less certain."
Brent crude, the global oil benchmark, is looking set to break back above $100 a barrel, and "more importantly, it could stay there for a while," Green told MarketWatch on Monday.
"Investors have been remarkably willing to look through the setbacks and assume negotiations would resume," but at some stage they stop doing that, Green said. "If the market concludes there isn't a deal coming any time soon, crude will need to price in a longer conflict and a higher risk of disruption to supply."
Robert Schroeder and Nora Redmond contributed.
-Isabel Wang -Myra P. Saefong
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June 01, 2026 11:43 ET (15:43 GMT)
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