Oil prices jumped, the U.S. dollar lifted from lows and stock markets wobbled on Monday as rising tension in the Middle East kept shipping in and out of the Gulf to a bare minimum, though traders were holding out hope for a resolution.
The ceasefire in the Iran war, due to run until Tuesday, was in doubt after the U.S. seized an Iranian cargo ship and Tehran's top military command vowed to retaliate.
Iran has re-imposed its de facto closure of the Strait of Hormuz, though Kpler data showed that more than 20 vessels carrying oil products, metals, gas and fertiliser passed through it on Saturday, the busiest day for the chokepoint since March 1.
Brent crude futures jumped about 6% to $96 a barrel in early Asia trade. The dollar, which sold off sharply on Friday when the strait briefly opened, rose slightly.
S&P 500 futures fell around 0.7%, a modest move considering the index notched a record closing high on Friday. Asia-Pacific markets were mixed, with Australia's S&P/ASX 200 down 0.5% and Japan's benchmark Nikkei up 0.7%.
Bond markets, which rallied on Friday, retreated.
"The headlines look bad; it looks like there's disagreement ... which has led to a little bit of re-escalation," said Damien Boey, portfolio strategist at Wilson Asset Management in Sydney.
"But I think, ultimately, both sides want to be able to do a deal - that's part of the reason why the market's optimistic and not selling off too much."
Iran rejected new peace talks with the U.S., its state news agency reported on Sunday, hours after U.S. President Donald Trump said he was sending envoys for talks in Pakistan and would launch new strikes on Iran unless it accepts his terms.
FOCUS ON HORMUZ
In forex news, the euro was down 0.1% at $1.1735 and the yen eased around 0.3% to 159 per dollar, while the Australian and New Zealand dollars fell slightly.
Bonds likewise partially retraced Friday moves, with benchmark 10-year U.S. Treasury yields, which had fallen 6.5 basis points on Friday, rising by 3.2 bps to 4.276%.
Investors sold fixed income assets through March in anticipation of higher oil prices driving inflation - something they have tempered a little in recent weeks.
"Our base case (AKA guess) is still resolution to the war. Trump is still focused on November midterm elections," said Paul Chew, head of research at Singapore's Phillip Securities in a note to clients.
Wall Street indexes touched record highs on Friday, supported by expectations of robust first-quarter earnings, the bulk of which come this week. China is expected to hold benchmark lending rates steady on Monday.
British inflation data, U.S. retail sales and European purchasing managers' index figures are due later in the week, though much of markets' focus will be on Gulf shipping.
"The critical barometer of geopolitical risk has been distilled into one data point: The number of ships transiting the Strait of Hormuz," said Bob Savage, head of markets macro strategy at BNY.
"Peace talks matter, but the immediate focus is on oil and other supply shortages driving inflation."
Published on April 20, 2026