Oil Prices Rise After Warnings Over Iran Negotiations

Global oil prices rose on Monday after warnings that negotiations to end the conflict with Iran have stalled. The global benchmark Brent crude increased 1.7% to $111.13, while U.S.-traded oil rose 2.1% to $107.62. Government borrowing costs also increased in the United States, Japan, and Europe as concerns over inflation grew.

The benchmark 10-year U.S. Treasury yield reached 4.63%, its highest level in more than a year.

Energy markets have faced volatility after Iran closed the Strait of Hormuz in response to strikes that began on 28 February. Approximately one-fifth of the world's oil and liquefied natural gas normally passes through the route. Iranian media reported that no concrete concessions were offered in response to recent proposals to end the conflict.

A lack of compromise would lead to an impasse in the negotiations, according to the semi-official Mehr news agency.

A warning stated that action must occur quickly or there would not be anything left. The message followed an earlier threat that a whole civilisation would die unless a peace deal was reached. Officials are scheduled to hold a meeting on Tuesday to discuss options for military action regarding Iran.

Inflation concerns have pushed up bond yields worldwide in recent weeks, with investors expecting central banks to raise interest rates.

Yields on Japanese bonds jumped after reports that the government may issue fresh debt to fund an extra budget addressing economic effects from the conflict. The yield on the 30-year Japanese government bond reached a record 4.2%, while the 10-year yield hit 2.8%, its highest since October 1996. Yields on eurozone bonds also increased. G7 finance ministers are meeting in Paris.

Higher oil prices have raised fuel costs for businesses including airlines entering peak holiday season. Irish airline Ryanair reported full-year results on Monday and stated that the conflict has created economic uncertainty. Ryanair secured contracts to fix prices for 80% of its jet fuel but noted the remaining 20% has spiked due to the conflict.

The carrier's profits rose to €2.26bn from €1.6bn last year, with sales up 11% to €15.5bn.

During the conflict, attacks have occurred on neighbouring countries including Israel, Bahrain, and the United Arab Emirates. On Sunday, the UAE reported a drone strike triggered a fire near its nuclear power station. Officials are investigating the source of the strike.

The country's defence ministry stated three drones entered from the western border direction, with one striking an electrical generator outside the inner perimeter of the Barakah Nuclear Power Plant in Abu Dhabi. No injuries were reported and there was no impact on radiological safety levels, local authorities said.