Global oil prices spiked sharply on Monday after the United States seized an Iranian cargo vessel, escalating tensions with Tehran and threatening to disrupt critical energy supply routes. Benchmark crude futures rallied amid fears that the fragile ceasefire between the two sides could collapse within days.

US West Texas Intermediate (WTI) crude futures for June delivery jumped 7.18 per cent to $88.52 a barrel, while Brent crude futures surged by over 7 per cent to $96.46 a barrel in early trading.

The US military said it fired on an Iranian-flagged cargo ship as it sailed towards the port of Bandar Abbas while attempting to breach a naval blockade. President Donald Trump later said on social media that American forces had taken full custody of the vessel and were inspecting its cargo.

The confrontation comes at a time when a weeks-long blockade in the Strait of Hormuz has already tightened global crude flows. Both the United States and Iran have imposed restrictions on maritime traffic, raising concerns of prolonged disruption.

According to Iranian media, Iran has also rejected plans for a second round of ceasefire talks, citing the ongoing blockade and what it described as Washington’s “excessive demands”. The diplomatic setback has cast doubt over efforts to stabilise the region, with the current ceasefire set to expire on Tuesday.