Brent crude futures rose 1.4% to $87.22 a barrel, while US West Texas Intermediate (WTI) surged 2.8% to $78.75, as markets digested fresh escalatory rhetoric from the White House just as US-Iran peace talks commenced.
The price action reflects investor anxiety that diplomatic progress may be fragile amid ongoing military tensions in the region.
The market move comes after President Donald Trump indicated that the existing ceasefire framework with Iran is effectively on life support, following Tehran's rejection of a US counterproposal to end hostilities.
Despite these diplomatic setbacks, the US administration confirmed that direct negotiations have begun, creating a volatile backdrop for energy traders who are weighing the risk of renewed conflict against the possibility of a negotiated settlement.
Recent days have seen oil prices climb steadily as fresh military strikes between US forces and Iranian targets heightened concerns over regional stability.
The juxtaposition of active combat operations and simultaneous peace talks has introduced significant uncertainty into supply risk assessments.