Oil prices surged and global stock markets declined following the United States’ seizure of an Iranian vessel in the Gulf of Oman, raising concerns over the stability of a ceasefire in the ongoing conflict between Washington and Tehran.

On Sunday, the U.S. Navy took control of a container ship that had reportedly breached the American blockade of the Strait of Hormuz, a critical maritime chokepoint for global oil shipments. The move intensified fears that diplomatic efforts to secure a lasting peace could be undermined as the existing ceasefire was set to expire this week.

Brent crude, the international benchmark for oil, rose by 5.1 percent to settle at $94.99 per barrel. Similarly, West Texas Intermediate (WTI), the U.S. benchmark, increased by 5.4 percent, closing at $88.37. These gains marked a partial rebound from recent declines driven by earlier optimism over the ceasefire.

On Wall Street, equities retreated. The S&P 500 index fell 0.4 percent after reaching a record high on Friday amid hopes for de-escalation in the Middle East. The Nasdaq Composite, heavily weighted with technology stocks, declined 0.6 percent during midday trading.

Diplomatic activity continued as a U.S. delegation, led by Vice President JD Vance, traveled to Islamabad to pursue peace talks with Iran and other regional stakeholders. However, Iranian officials indicated that their attendance was not yet confirmed. Meanwhile, U.S. President Donald Trump signaled a hardening position, stating it was “highly unlikely” the United States would extend the ceasefire beyond its expiration without a concrete agreement.

Market analysts highlighted the potential for increased volatility given the uncertainty surrounding the ceasefire’s continuation. Anthony Willis, senior economist at Columbia Threadneedle Investments, noted that the looming deadline and unresolved negotiations were likely to contribute to unsettled trading conditions.

In Europe, stock markets broadly declined as well. The Stoxx Europe 600 index fell 0.9 percent, with major national indexes recording losses: France’s CAC 40 dropped 1.1 percent, Germany’s DAX decreased by 1 percent, and the UK’s FTSE 100 fell 0.5 percent.

The bond markets showed mixed reactions. Yields on 10-year U.K. government bonds climbed 0.07 percentage points to 4.84 percent, reflecting concerns over inflation pressures linked to energy prices. In the U.S., 10-year Treasury yields edged up slightly to 4.26 percent, while German Bund yields rose to 2.98 percent.

Currency markets saw the U.S. dollar weaken marginally by 0.1 percent against a basket of currencies. The euro and the British pound each strengthened by about 0.2 percent, trading at $1.179 and $1.354 respectively.

Precious metals experienced declines amid the market turbulence, with gold prices falling 0.6 percent to $4,797 and silver dropping 1.2 percent to $7.81.

The geopolitical tensions and economic reactions underscore the fragile state of international relations and markets as the expiration of the ceasefire approaches and negotiations remain unresolved.