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Oil markets are on edge again. Prices surged after a sudden collapse in US-Iran peace talks, raising fears of a wider energy crisis and disruption to global supply.

Brent crude climbed more than 2 percent on Sunday after hopes for a second round of ceasefire negotiations between Washington and Tehran fell apart over the weekend. The move highlights growing concern that diplomacy is breaking down, with major consequences for fuel costs worldwide.

After briefly easing, Brent, the main global benchmark, stood at $106.99 as of 1:30 GMT, signaling ongoing volatility as traders respond to rising geopolitical risk.

Markets Show Strength Despite Tensions

Asian stock markets opened higher despite the diplomatic setback. Japan’s Nikkei 225 rose 0.9 percent, while South Korea’s KOSPI gained 1.5 percent in early Monday trading.

The gains suggest investors are holding steady for now, even as uncertainty grows.

Talks Fall Apart Before They Begin

The latest negotiations collapsed before they could start. US President Donald Trump on Saturday cancelled a planned trip to Pakistan by his envoys, Steve Witkoff and Jared Kushner, after Iranian Minister of Foreign Affairs Abbas Araghchi left Islamabad without any direct engagement between the two sides.

The sudden move dealt a serious blow to hopes for progress.

Diplomatic Efforts Shift to Russia

Araghchi arrived in Saint Petersburg on Monday for talks with Russian President Vladimir Putin and other officials, as Tehran looks for a path forward amid the deadlock.

The visit followed a brief stop in Oman on Sunday, showing how quickly the situation is evolving.

Fragile Truce Faces Uncertainty

Tensions remain high despite a temporary pause in fighting. Trump announced an extension to the two-week truce last week but did not set a clear deadline for reaching a deal.

That lack of clarity is adding to market anxiety.

Strait of Hormuz Threat Raises Alarm

At the center of the crisis is the Strait of Hormuz, a key route for global energy supply that is now under pressure.

As talks stall, Iran’s threats against commercial shipping continue to limit traffic through the waterway, raising the risk of a supply shock.

On Saturday, only 19 commercial vessels passed through the strait. Normally, the route carries about one fifth of the world’s oil and natural gas supplies.

Before the United States and Israel launched their war on Iran in late February, the waterway saw an average of 129 daily transits, according to the United Nations Trade and Development.

Global Impact in Focus

The sharp drop in shipping activity signals more than a diplomatic setback. It points to a potential crisis in global energy supply, with ripple effects that could drive higher fuel prices, strain economies, and increase geopolitical risk.

For now, markets are watching closely. But if tensions continue to rise, the latest price surge may only be the start.