Oil prices extend gains as Iran said to suspend peace talks with US

(Sharecast News) - Oil prices rose further in afternoon trade on Monday following a report that Iran has suspended peace talks with the US until Israel ends its operations in Lebanon.

According to Iranian news agency Tasmin, Iran has suspended the talks in protest at Israel's offensives in Lebanon and Gaza.

Tasnim said the suspension would remain in place until "the positions of Iran and its allied proxy forces are taken into account".

It also said that Iran will move to fully close the Strait of Hormuz.

At 1457 BST, Brent crude was up 5.5% at $96.12 a barrel and West Texas Intermediate was 6.6% higher at $93.13.

Oil prices were already trading higher after Iran and the US continued to trade blows over the weekend, dampening hopes for an imminent peace deal.

European stocks also took a turn for the worse, with London's FTSE 100 down 0.8% and the benchmark Stoxx 600 index 1% lower by 1509 BST.

Chris Beauchamp, chief market analyst at IG, said: "Hopes of further progress in US-Iran talks have been dashed as the latter has walked away from the table. This has duly resulted in a spike for oil prices, since the combination of this and the weekend's exchange of fire dramatically raises the chances of a fresh round of conflict.

"Markets know that oil stockpiles are being rapidly run down, and the rosy assumptions around the renewal of supplies involved the straits being open by June. No such opening is in sight, and each day brings the crunch point closer."