Oil prices rise to near-three week highs as US-Iran peace talks falter

Oil prices have hit a near three-week high as hopes of progress on peace talks between the US and Iran were dashed once again, after President Donald Trump cancelled plans to send a negotiating team to Pakistan.

The cost of benchmark Brent crude continued its ascent, rising 2% to just under 108 US dollars a barrel in early morning trading on Monday, rising back up to levels seen before the first round of peace talks began in early April.

Ceasefire talks appeared increasingly fragile, as Mr Trump declared over the weekend that envoys from Washington would no longer be travelling to Islamabad in Pakistan because of a lack of progress with Iran.

Mr Trump told Fox News on Sunday: “If they want, we can talk but we’re not sending people.”

He last week indefinitely extended the ceasefire between the US and Iran, which was agreed on April 7, which has largely halted the fighting that began with joint US and Israeli strikes on February 28.

But a permanent resolution has yet to be agreed and the crucial Strait of Hormuz, through which a fifth of the world’s oil supplies are carried, remains effectively blocked.

Oil prices fell below 87 dollars a barrel in mid-April when both sides said the waterway was back open for commercial tankers, but the Strait was soon impassable once more as talks faltered, sending crude soaring back up.

Susannah Streeter, chief investment strategist at Wealth Club, said: “The president said negotiators would be wasting their time heading to Pakistan and the lack of progress has hit sentiment at the start of the week.

“But some hopes of a resolution are being kept alive, with reports that Iran has put another proposal on the table which aimed at de-escalating the conflict and potentially seeing the key Strait of Hormuz reopen.

“Details are scant about the offer and patience on both sides is clearly frayed.”

The FTSE 100 Index was 11.64 points lower at 10367.44 in early trade.