Oil Spikes as Iran Rejects US Peace Talks Amid Gulf Blockade

Global energy markets are reacting sharply to renewed tensions in the Middle East after Iran announced it would boycott a second round of truce talks with the United States. The diplomatic breakdown comes as Tehran cites a continuing US naval blockade in the Gulf and what it describes as 'unrealistic expectations' and 'excessive demands' from Washington. The geopolitical friction intensified over the weekend following the US seizure of an Iranian cargo ship near the Strait of Hormuz. This move prompted immediate threats of retaliation from Tehran, effectively erasing the optimism that had fueled a strong rally in US equity markets at the end of the previous week, where the Dow Jones had jumped 1.8%. Brent crude oil prices rebounded significantly in response to the instability, climbing above $95 per barrel after having dipped below $87 at the end of last week. This surge in energy costs is expected to weigh heavily on European indices as investors brace for potential supply disruptions. The FTSE 100 is projected to open lower on Monday, with an anticipated drop of approximately 40 points from its Friday close of 10,667.63. While the impact on London's blue-chip index is notable, mainland European markets are expected to experience more severe declines as the risk premium for oil increases.