Oil prices surged on Monday after reports emerged that Iran could suspend indirect communications with the United States and move toward a complete closure of the Strait of Hormuz, raising concerns over global energy supplies and escalating tensions in the Middle East.

According to Iranian state-affiliated media outlet Tasnim, Tehran plans to halt negotiations conducted through intermediaries until military operations in Lebanon and Gaza come to an end. The report also suggested that Iran and its regional allies are considering additional measures, including restricting access through key maritime routes such as the Strait of Hormuz and the Bab al-Mandeb Strait.

The Strait of Hormuz remains one of the world's most important energy transit routes, historically carrying around 20% of global seaborne oil shipments. Any disruption to traffic through the waterway has the potential to significantly impact global crude supplies and energy prices.

Following the report, crude oil prices climbed sharply as traders reassessed the likelihood of a diplomatic breakthrough. Market sentiment had recently improved on expectations that negotiations between Washington and Tehran could lead to a broader de-escalation of the conflict. However, the latest developments have weakened those expectations and renewed fears of prolonged supply disruptions.

Tensions have continued to rise in recent days as military activity intensified across multiple fronts. The United States and Iran have exchanged new attacks despite earlier ceasefire efforts, while Israel has expanded operations against Hezbollah-linked targets in Lebanon.

Iranian Foreign Minister Abbas Araghchi stated that any ceasefire agreement must apply across all regional theatres, warning that violations in one area would be viewed as violations of the broader arrangement. He added that responsibility for any escalation would fall on parties that fail to uphold the agreement.

The uncertainty has also raised concerns about future oil exports from the Persian Gulf. Shipping activity through the Strait of Hormuz remains significantly below pre-conflict levels, with many vessels avoiding the route due to security risks. Market participants are increasingly worried that prolonged restrictions could tighten global supply and keep energy prices elevated.

Meanwhile, U.S. President Donald Trump maintained that a diplomatic solution remains possible, stating that Iran continues to show interest in reaching an agreement despite the recent deterioration in relations.

As geopolitical tensions intensify and prospects for a negotiated settlement become less certain, investors are closely monitoring developments in the region for their potential impact on energy markets and broader financial conditions.

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