Oil climbs as U.S. and Iran trade strikes amid stalled ceasefire negotiations

Monday 01 June 2026 - 11:20

By: Dakir Madiha

Oil climbs as U.S. and Iran trade strikes amid stalled ceasefire negotiations

Oil prices rose on Monday after fresh military exchanges between the United States and Iran exposed the fragility of a weeks-old ceasefire, while Wall Street prepared to enter June on the back of a record-setting rally driven by artificial intelligence stocks. Brent crude futures advanced roughly 3 percent, approaching 94 dollars per barrel in early Monday trading, after recording their steepest monthly decline in years during May.

The price move followed an announcement by the U.S. military that it had struck Iranian radar and drone control sites near Geruk and on Qeshm Island over the weekend, in retaliation for Iran shooting down an American MQ-1 drone operating in international waters. Iran acknowledged launching a retaliatory strike of its own, while Kuwait reported intercepting drone and missile fire. The exchanges laid bare how precarious the ceasefire in place since early April remains. Negotiators reached a draft 60-day memorandum of understanding aimed at extending the truce and reopening the Strait of Hormuz, but President Donald Trump has not yet approved it. After convening his advisers in the Situation Room on Friday, Trump said he would reach a definitive decision soon without specifying a timeline. Iran's foreign ministry spokesperson stated that no final understanding had been reached and that nuclear issues were not being addressed in detail at this stage.

On equity markets, U.S. stock futures advanced on Sunday evening, with Nasdaq 100 futures gaining between 0.4 and 0.6 percent as investors sought to extend a rally that carried all three major indices to record highs in May. The Nasdaq Composite surged more than 8 percent over the month, outpacing the S&P 500, which gained approximately 5 percent, and the Dow Jones Industrial Average, which rose nearly 3 percent. The rally was sustained by persistent optimism around AI-related capital expenditure. On May 26, both the S&P 500 and the Nasdaq reached all-time closing records, driven by semiconductor stocks, with Micron rising 19 percent and crossing the one-trillion-dollar market capitalization threshold for the first time.

The outlook for both oil prices and diplomatic progress remains uncertain. A senior adviser at the International Capital Market Association said oil prices were likely to hold between 90 and 100 dollars per barrel for at least the coming months, until the shape of a durable peace agreement becomes clearer. Asian markets opened higher on Monday, with Japan's Nikkei 225 advancing 0.5 percent on AI-driven semiconductor demand, partially offsetting the unease generated by the continued diplomatic impasse in the Gulf.