Oil prices climbed about 3% to a two-week high in volatile trading on Monday as concerns over prolonged supply disruptions from the Iran war outweighed reports that the United States may temporarily waive sanctions on Iranian crude during ongoing negotiations. Brent crude futures for July delivery rose $2.84, or 2.6%, to settle at $112.10 per barrel, while U.S. West Texas Intermediate crude for June delivery gained $3.24, or 3.1%, to close at $108.66. The gains pushed Brent to its highest close since May 4 and WTI to its strongest settlement since April 7.
Trading remained highly volatile ahead of the expiration of the June WTI contract on Tuesday. The contract swung sharply during the session, rising more than $4 per barrel before later giving back over $2 as thin trading volumes amplified price moves. After the market close, both benchmarks pared some gains after U.S. President Donald Trump said he would postpone a planned military strike on Iran that had reportedly been scheduled for Tuesday.
Despite intermittent signs of diplomatic progress, markets remained focused on the continuing disruption to global oil flows caused by the near-total closure of the Strait of Hormuz, through which roughly 20% of the world’s oil supply normally passes.
International Energy Agency Executive Director Fatih Birol warned that global commercial oil inventories are being depleted rapidly, with only a limited supply buffer remaining. He said strategic petroleum reserve releases have added roughly 2.5 million barrels per day to the market, but cautioned that those reserves “are not endless.”
Iran’s semi-official Tasnim news agency reported that U.S. negotiators had accepted a proposal to waive Iranian oil sanctions during the negotiation period, marking a shift from previous U.S. positions. Separately, Pakistani mediators reportedly delivered a revised Iranian proposal to Washington aimed at reviving stalled peace talks.
Still, analysts said overall progress toward a durable diplomatic resolution remains limited. The fragile ceasefire established after six weeks of conflict following the February 28 U.S.-Israeli strikes on Iran remains under pressure, with President Trump recently describing the truce as “on life support.”
Analysts also warned that a prolonged closure of the Strait of Hormuz could have increasingly severe consequences for the global economy, including weaker growth, rising inflation, and renewed central bank tightening across major economies.
Economic concerns were also evident in China, where April data showed slowing industrial production, weak retail sales, and the lowest crude oil throughput since August 2022 as higher energy costs and softer domestic demand weighed on activity.
Meanwhile, the United States said it would extend a sanctions waiver allowing purchases of Russian seaborne oil for another 30 days to support countries facing energy shortages linked to disruptions in Gulf oil supplies.