Oil prices rose sharply in early Monday trading while stock markets across the globe reported drops after concerns grew that the ceasefire between the United States (US) and Iran could come to an end.

The concerns came following the American seizure of an Iranian cargo ship and continued disruptions in traffic through the Strait of Hormuz. The US said on Sunday it had seized the ship attempting to breach its blockade, while Iran warned it would retaliate, raising fears of renewed escalation.

Tehran also confirmed that it would not take part in a second round of negotiations that Washington DC had hoped to begin before the ceasefire deadline this week.

As a result, brent crude climbed $5.51, or 6.1 per cent to $95.89 a barrel by 0752 GMT, while US West Texas Intermediate rose $5.46, or 6.5 per cent to $89.31.

Both benchmarks had fallen 9 per cent on Friday, marking their steepest daily drop since April 18, after Iran stated that commercial passage through the Strait of Hormuz remained open for the duration of the ceasefire.

While US President Donald Trump had also said that Iran agreed not to close the strait again, renewed violence quickly reversed expectations.

“Within 24 hours of Friday’s ‘completely open’ announcement, there were already tankers that were fired upon by the Islamic Revolutionary Guard Corps (IRGC),” said Sparta Commodities analyst Gaik June Goh.

She added that supply conditions were tightening further, noting that “10–11 million barrels per day of crude oil remains shut in”, referring to disrupted production.