A tense, weeks-long standoff between the United States and Iran showed no sign of easing on Monday, after President Trump turned down an Iranian proposal aimed at ending hostilities and reopening the Strait of Hormuz, the narrow waterway that a large share of the world's seaborne oil passes through.
The stalemate has been building for weeks. Earlier this month, Iran struck a base in Jordan used by the United States, damaging several American military aircraft, part of a broader exchange that has drawn in bases and forces across the region, including Britain's RAF Fairford, which has been used to support American operations against Iran. Over the weekend, President Trump told Axios in a phone interview that he expects U.S. negotiators to hold more talks with Iran this week, but analysts said the pause in progress left markets bracing for a prolonged standoff rather than a quick resolution.
The practical effect has been most visible in energy markets. Brent crude, the international oil benchmark, has traded anywhere from the high nineties to above 110 dollars a barrel over the past several sessions as traders weigh the odds that the strait, a vital corridor for tankers moving oil out of the Gulf, could see further disruption. Iranian oil tankers have reportedly been left waiting off the coast of Bandar Abbas near the strait as the standoff continues.
The uncertainty has rippled well beyond the Middle East. Higher oil prices feed directly into inflation, which is already a live concern for central banks, and traders have used the standoff as a reason to price in a higher chance that the Federal Reserve keeps raising interest rates. Stocks in the United States and Asia have wobbled along with the headlines, and safe-haven buying has been uneven, with gold dipping even as bonds sold off.
Traders and diplomats alike are watching for any sign that U.S.-Iran talks resume this week, and for whether tanker traffic through the strait continues without further incident.
Why does the Strait of Hormuz matter so much?
It is one of the world's most important routes for oil tankers, so any disruption or threat to shipping there tends to push global oil prices higher.
Are the U.S. and Iran currently in direct talks?
Trump said over the weekend that he expects negotiators to engage in more talks this week, after diplomatic progress stalled.