Oil rises after Trump threatens fresh strikes on Iran, overshadowing peace talks

Oil prices rose Monday after President Trump threatened renewed military action against Iran, undercutting last week's interim peace agreement. Brent crude for August delivery added 1.23% to $81.56 a barrel. West Texas Intermediate for July gained 3.04% to $78.93.

The threat came even as Vice President JD Vance met Iranian officials in Switzerland for the first talks under the accord signed last week. Tehran had again closed the Strait of Hormuz, a channel that handles roughly a fifth of global oil shipments.

The supply picture is not as straightforward as the rally suggests, Quantum Strategy's David Roche said in a note Monday. Middle East oil supply measured with storage and tanker crude is near prewar levels. That surplus reflects inventory liquidation, not higher production, he said. Once the stockpiles empty, the market faces tight supply.

Goldman Sachs analysts offered a longer-term counterpoint. Sustained supply disruptions could speed the shift to electric vehicles, they said, weighing on crude demand over time.

The latest rally reverses some of last week's decline after the initial peace deal was struck, as covered in AlphaScala's Oil Plunges on US-Iran Deal report. The U.S.-Iran talks are set to continue this week, with the Strait of Hormuz reopening a key sticking point.