Collapse of US-Iran talks heightens fears of prolonged energy shock

The collapse of US-Iran talks and renewed threat of a prolonged Strait of Hormuz disruption has sharply raised energy-risk premia, with weekend indications pointing to US crude reopening near $98/bbl from $96.50 on Friday. Brent ended last week at $94.26/bbl versus a war peak of $119.45 and about $72/bbl before the conflict, but analysts now expect another leg higher if diplomacy does not resume quickly. JPMorgan sees oil staying above $100/bbl in Q2 before easing later this year, while IG’s Tony Sycamore warned of a “rocky open” for energy markets. Mohamed El-Erian said the immediate market reaction should be higher oil prices and higher borrowing costs, with central banks likely to reassess prior rate-cut assumptions as inflation risks re-accelerate. For precious metals, the setup is broadly supportive for gold via a stronger inflation impulse, weaker real-rate expectations, and geopolitical safe-haven demand if the standoff escalates further. Near-term focus will be on how far crude gaps on the open, whether the Strait of Hormuz remains effectively shut, and whether central banks/markets begin pricing a more hawkish policy path; that combination would keep gold bid even if broader risk assets remain volatile.