Oil Surges 5% as Hormuz Talks Stall, Stocks Flat Ahead of Wednesday CPI

Oil prices surged sharply on Monday as negotiations to reopen the Strait of Hormuz broke down, with Brent crude settling at $87.72 a barrel, up 4.7%, and West Texas Intermediate gaining 5.05% to close at $82.13 a barrel. The moves extended a three-session rally of roughly 9.2% in crude. Talks between Iran and Oman failed to persuade traders that a deal would lead to a quick resumption of global LNG flows, and President Trump pushed back against Iran's demands for war compensation, deepening doubts that Washington and Tehran will reach a lasting resolution in the near term.

European natural gas prices also advanced on the LNG disruption fears. Adding to supply concerns, U.S. emergency crude stocks fell below 300 million barrels, reaching their lowest level since 1983 when the Strategic Petroleum Reserve was originally filled, raising questions about whether the salt caves storing the oil can physically draw it out at such low volumes. The S&P 500 closed little changed, trading in a narrow 30-point range as gains in energy stocks offset weakness in technology, including Intel, and several defensive sectors.

Traders showed little conviction either way, with attention turning to Wednesday's CPI report and concerns that sustained high oil prices could force the Federal Reserve to hike rates even as the labor market cools. A crude inventory report due this week is expected to show a significant build, though analysts attributed the figure to a temporary mismatch in imports and exports.