Peace talks between the United States and Iran in Pakistan collapsed Sunday without an agreement. The failure ends market expectations for eased sanctions and the full reopening of the Strait of Hormuz.
Oil prices rose immediately as supply concerns returned to the market. President Donald Trump stated the absence of a deal will result in a U.S. naval blockade of the strait.
The breakdown raises concerns of a sustained energy shock and rising global inflation. Increased operating costs now threaten energy-intensive sectors such as technology and artificial intelligence.