HONG KONG - Oil prices surged and stocks sank on Monday after US-Iran peace talks fell apart and Donald Trump announced a blockade of the strategic Strait of Hormuz, adding to fears of energy supplies from the Middle East.
Negotiations in Islamabad at the weekend fell apart with the US delegation -- led by Vice President JD Vance -- blaming Iran's refusal to give up its nuclear programme and Tehran hitting out at "maximalism, shifting goalposts, and blockade".
The news dealt a blow to hopes for an end to the six-week conflict, which has sent crude prices soaring, pushing inflation up and sending shivers through the global economy.
Oil prices -- which tumbled last week after the United States and Iran agreed to a ceasefire -- jumped around eight percent Monday, with both contracts topping $100 a barrel.
Equities fell across Asia, with Tokyo, Hong Kong and Seoul off at least one percent, while Shanghai, Sydney, Singapore, Taipei and Jakarta were also down.
Nicole Grajewski, an assistant professor at the Center for International Research at Sciences Po in Paris, warned that a US blockade was "not a minor coercive signal" but would rather be considered an effective resumption of the war.
Fawad Razaqzada, a market analyst at Forex.com, said: "The fundamental issue remains trust — or rather, the lack of it — between two long-standing adversaries who still appear some distance from common ground."
Investors are also keeping an eye on attempts to resolve the conflict between Israel and Hezbollah, as Lebanese Prime Minister Nawaf Salam said he was pushing to ensure the withdrawal of Israeli forces.
"We will continue to work to stop this war, to ensure the Israeli withdrawal from all our lands, the return of all the prisoners, to rebuild our destroyed villages and towns, and the safe return of the displaced," Salam said.