Oil prices jumped hard on Monday after reports that Iran had stopped negotiating with the United States, then gave back part of those gains after President Donald Trump said the talks were still moving ahead. Brent crude rose as much as 7% in morning trading before easing to about $95 a barrel, while West Texas Intermediate surged as much as 8% before slipping back to $92.
The swing mattered because traders were already looking for signs that the standoff between Washington and Tehran could deepen. The move also spilled into bonds, with the 10-year Treasury yield rising as much as five basis points before settling at 4.43%, and the 30-year yield briefly climbing two basis points before dropping back below the 5% threshold. For investors scanning for what changed today, the answer was simple: the market briefly priced in a higher risk that diplomacy was breaking down.
Markets had been on edge before the opening bell. Oil had fallen sharply last week and was still down 20% from its wartime peaks before Monday's rebound, a reminder that the broader trend has been driven by expectations around conflict, ceasefire terms and supply risks in the region. The Strait of Hormuz remained a central concern as Iran was said to be planning to block traffic there again in response to Israel's attacks against Hezbollah in Lebanon.
That is why the contradiction mattered. Iranian state media said Iran had stopped negotiating with the US, but Trump told CNBC that Tehran had not told him it was backing out and added, “I don't care if they're over, honestly.” In a post on Truth Social, he also said talks with Iran were going forward at a “rapid pace,” pushing back against the report that had jolted the market.
The ceasefire itself had already frayed amid tit-for-tat exchanges, with the US accusing Iran of aggressive moves in the Strait of Hormuz and Iran accusing the US of blocking its vessels and operations there. Over the weekend, the US said it bombed Iranian radar and drone command and control sites after Iran shot down an American MQ-1 Predator drone. On Monday, Iran fired two ballistic missiles at US bases in Kuwait, and air defenses stopped them.
Israel's widening campaign against Hezbollah in Lebanon added another layer of pressure, including strikes in Beirut in recent days. Iranian foreign minister Seyed Abbas Araghchi wrote on X that the United States and Israel bear responsibility for the consequences of any breach of the truce, underscoring how quickly diplomacy, military action and market pricing have become tied together.
For now, the sharp reversal in oil shows that traders are still treating any sign of progress or collapse in the talks as immediate market-moving news. The unresolved question is whether the two sides can actually keep negotiating at the “rapid pace” Trump described, or whether the next move in the Strait of Hormuz turns the latest market flare-up into something bigger.
