Futures tied to the Dow Jones industrial average fell 174 points, or 0.35%. S&P 500 futures were down 0.26%, and Nasdaq futures lost 0.32%.

U.S. oil futures rose 1.75% to $107.26 a barrel, while Brent crude climbed 1.32% to $110.70. Gold fell 0.37% to $4,545 per ounce.

The U.S. dollar was up 0.09% against the euro and up 0.06% against the yen. The yield on the 10-year Treasury climbed 1.6 basis points to 4.611%.

Last week’s euphoria came to screeching halt on Friday, when the U.S.-China summit failed to produce a breakthrough that would reopen the strait and allow oil supplies to flow again.

Given the fading hopes that energy-fueled inflation will come back down soon, bonds sold off sharply, with U.S., German, Japanese, and U.K. yields all soaring while stocks tumbled. For the first time in two decades, the 30-year Treasury yield hit 5% as Wall Street priced in greater odds for rate hikes.

At the same time, talks between the U.S. and Iran have stalled, keeping the strait shut. Frustrated that the diplomatic channel remains in limbo, President Donald Trump is weighing his military options.

Axios reported that he met with members of his national security team at his Virginia golf club on Saturday to discuss Iran. Another meeting in the White House Situation Room is planned for Tuesday.

Trump told Axios “the clock is ticking” for Iran and warned if the regime doesn’t make a better deal “they are going to get hit much harder.”

But the clock is also ticking on the oil market. Shortages are worsening, and Wall Street sees an imminent tipping point ahead.

JPMorgan predicted that commercial oil inventories in the developed world could “approach operational stress levels” by early June. Capital Economics warned oil stockpiles could reach “critically low levels” by the end of June.

Similarly, analysts at UBS also said oil inventories are approaching record lows, warning that “buffers have now largely been exhausted.”

As stockpiles go even lower, UBS said oil prices could become more volatile and highlighted the “risk of panic buying if physical dislocation intensifies and the Strait of Hormuz remains closed.”

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