- Analysts warn that sharper movements are possible if Hormuz remains blocked.
- The dollar strengthens as investors seek liquidity amid geopolitical uncertainty.
- Stock futures decline ahead of corporate earnings week in US markets.
Oil prices rose nearly 3% in early trading on Monday as stalled talks between the United States and Iran raised fears over the Strait of Hormuz, while stock futures fell and the dollar strengthened in Asia.
Brent crude rose 2.8% to $104.06 a barrel, while US crude gained 2.7% to $97.97 a barrel, as markets reacted to renewed geopolitical tensions in the Gulf and the risk of a prolonged disruption to energy flows.
US President Donald Trump on Sunday rejected Iran’s response to a US proposal for peace talks, calling Tehran’s demands “totally unacceptable” as indirect negotiations remained stalled.
An Iranian proposal sent to the United States reportedly called for an end to hostilities on all fronts and the lifting of sanctions, along with reparations and recognition of Iran’s position in the Strait of Hormuz.
“The conflict in the Middle East is now entering its 11th week,” said Bruce Kasman, global head of economics at JPMorgan. He added that while energy prices had risen, they remained “headwinds and not obstacles to ending the expansion.”
Kasman warned that the risk of a sharper market move increases the longer the Strait remains effectively closed, and commodities teams will see operational stress increase through June.
In currency markets, the dollar strengthened as investors sought liquidity, rallying against the Japanese yen, while the euro fell slightly.
Stock futures also weakened, with investors cautious ahead of a week packed with gains from major retail and technology companies.
Attention will also focus on US President Donald Trump’s visit to China later this week, where he is expected to meet President Xi Jinping for talks on trade, Taiwan, artificial intelligence and nuclear issues.
Gold declined as it failed to attract strong safe-haven demand despite elevated geopolitical tensions.
