Global oil prices have jumped after US President Donald Trump said its navy had intercepted and seized an Iran-flagged cargo ship.
The Brent crude benchmark oil price rose by more than 4% to $94.20 (£69.60) a barrel, reversing a fall on Friday when Iran said the Strait of Hormuz would be 'completely open' to commercial vessels for the remainder of the ceasefire.
On Saturday, Iran said it was closing the strait again and that any ship that approached it would be targeted.
The waterway is of key importance as usually about 20% of the world's oil and liquefied natural gas passes through it.
Energy markets have seen wild swings since the US and Israel attacked Iran on 28 February and Tehran responded with threats to target shipping in the strait.
Trump has said his representatives will be in Pakistan on Monday for negotiations. A White House official said Vice-President JD Vance would lead the US delegation.
But Iran's state media said Tehran had 'no plans for now to participate' in the talks, although Iranian officials have not clarified the country's position yet.
Oil markets continue to gyrate in response to oscillating social media posts by the US and Iran, rather than the realities on the ground which remain challenging for oil flows to resume in a rapid fashion. Analyst Saul Kavonic from financial services firm MST Marquee explained, 'This is all part of negotiations, physically playing out in real time on the Strait of Hormuz.'
Shanti Kelemen, co-chief investment officer at 7 Investment Management, highlighted a sense of fatigue in the market due to the 'chopping and changing' situation. 'I think the market stopped believing the words, and will look more towards the actions,' she noted.
The Strait of Hormuz remained closed on Sunday, a day after the Islamic Revolution Guard Corps (IRGC) noted it was ending a temporary reopening over the US blockade, which it said violated the terms of their ceasefire agreement. Iran stated it would stay closed until the US ended its naval blockade.
Trump had announced on Friday that the naval blockade would continue until a deal was agreed by the two countries.
On the side of stock markets, the indices painted a mixed picture. In the US, the Dow Jones Industrial Average was flat, while the S&P 500 and the Nasdaq both closed 0.2% lower. In Europe, the UK's FTSE 100 index finished down 0.5% and both Germany's Dax and France's Cac 40 dropped by more than 1%. Conversely, Asian markets showed gains with Japan's Nikkei index closing up 0.6% and South Korea's Kospi climbing 0.4%.
Since the start of the Iran war, energy prices have enterprising volatile trading. Brent crude, which serves as a benchmark for oil futures prices, traded around $70 per barrel before the conflict escalated, reaching nearly $120 on 9 March.
The current global energy crisis caused by the persistent conflict threatens to spike prices and provoke fuel shortages, particularly affecting countries heavily reliant on the energy passage through the Strait of Hormuz.
Governments in Asia, facing acute supply challenges, have implemented various measures to conserve fuel, including working from home, cutting the workweek, declaring national holidays, and closing educational institutions earlier than planned. In places like Singapore and Thailand, calls to reduce air conditioning usage have been made. Even China is limiting fuel price increases to stave off a public outcry as citizens contend with a significant price jump.
Concerns over supply depletion have been underscored by the International Energy Agency, which warned that Europe could be facing acute fuel shortages in the nearing weeks.
