Oil prices continued their upward climb on Monday, as markets focused on escalating geopolitical risks in the Middle East despite renewed assertions by US President Donald Trump that talks with Iran remain under way and could still lead to a diplomatic breakthrough.
Benchmark Brent Crude rose $2.43, or 2.16%, to $115 a barrel after ending Friday 4.2% higher, putting it on course for a strong monthly gain. West Texas Intermediate climbed $1.86, or 1.87%, to $101.50 a barrel, following a 5.5% surge in the previous session.
The gains came after Yemeni Houthi forces launched their first attacks on Israel over the weekend, heightening fears that the conflict could widen further across the region and deepen concerns over supply disruption.
“The market has largely moved past expectations of a negotiated end to the conflict, despite Trump’s claims of ongoing direct and indirect talks with Iran, and is instead preparing for a significant escalation in hostilities,” Reuters quoted said Vandana Hari, founder of oil market analysis firm Vanda Insights, as saying. “That remains supportive for crude prices, with major uncertainty over both timing and how events unfold.”
Iran's new leaders reasonable: Trump
Speaking to reporters, President Trump said the US and Iran have been meeting "directly and indirectly" and that Iran's new leaders have been "very reasonable".
Trump's remarks on Sunday came after Pakistan, which is acting as an intermediary between Tehran and Washington, said it was preparing to host "meaningful talks" in the coming days aimed at ending the month-long Iran war.
"I think we'll make a deal with them, I'm pretty sure, but it's possible we won't," Trump said.
Trump said he thought the US had already accomplished regime change in Tehran after strikes killed the country's supreme leader and other top officials, but said twice that their replacements seemed "reasonable."
Pakistan mediation
Pakistani Foreign Minister Ishaq Dar said talks between regional foreign ministers on Sunday covered ways to bring an early end to the war, and potential US-Iran talks in Islamabad.
"Pakistan will be honoured to host and facilitate meaningful talks between the two sides in coming days, for a comprehensive and lasting settlement of the ongoing conflict," he said. It was not clear whether the U.S. and Iran had agreed to attend.
Iran won't accept humiliation
Iran's parliament speaker, Mohammad Baqer Qalibaf, earlier accused the US of sending messages about possible negotiations while at the same time planning a ground invasion. Tehran was ready to respond if US soldiers were deployed, he said.
"As long as the Americans seek Iran's surrender, our response is that we will never accept humiliation," he said in a message to the nation.
Several hundred special operations personnel have arrived in the region, the New York Times reported on Sunday, citing two military officials. That comes on top of thousands of US Marines that came on Friday aboard an amphibious assault ship, the first of two contingents, the US military has said.
Reuters has reported that the Pentagon has been considering military options that could include ground forces, although Trump has not approved any of those plans, according to multiple news outlets.
In an interview with Financial Times published on Sunday, Trump said he wanted to "take the oil in Iran" and could seize the export hub of Kharg Island. Taking control of Kharg would require ground troops. The island handles 90% of Iran's oil exports and seizing it would give the United States the ability to severely disrupt Iran's energy trade, placing enormous pressure on Tehran's economy.
