The US seized an Iran-flagged cargo ship in the Gulf of Oman on Sunday. Oil jumped back near $88 a barrel. The two-week ceasefire expires tomorrow.
Here is what happened, why oil moved, and what investors should watch next.
What happened this weekend
On Sunday, April 19, the US Navy fired on an Iranian container ship in the Gulf of Oman. Marines then took custody of the vessel after it tried to slip past the US naval blockade.
Tehran called it piracy and promised a response. Iran then tightened control over the Strait of Hormuz again, days after briefly reopening it.
Oil prices back near $88
US crude climbed 6.3% to $87.88 a barrel on Monday. Brent rose 5.3% to $95.20.
About 20% of the world's oil and natural gas passes through the Strait of Hormuz. Any real threat to shipping moves prices fast.
Stocks gave back some of last week's gains. The S&P 500 fell 0.24%. The Nasdaq slipped 0.26%. The Dow was flat.
The ceasefire expires Wednesday
The current truce ends April 22. President Trump told CNBC he is not interested in an extension.
He said he expects to resume strikes if no deal is reached. His exact words: "I expect to be bombing because I think that's a better attitude to go in with."
Talks in Islamabad are shaky
Vice President JD Vance is leading a US team to Pakistan for a second round of talks. Steve Witkoff and Jared Kushner are going too.
Iran's parliament speaker Mohammad Bagher Ghalibaf is expected to lead Tehran's side. But an Iranian spokesperson said Tehran has "no plans" for new talks.
Pakistani mediators say both teams should arrive early Wednesday. The gap between the two sides is wide.
Sticking points
Trump named two main issues. First, Iran's continued blockage of the Strait of Hormuz. Second, Iran's refusal to drop its nuclear program.
Either one could sink the talks. Both together make a deal by Wednesday a tall order.
What investors should watch
Oil is the cleanest read. If the Strait stays closed or US strikes resume, expect another leg higher in crude.
Defense stocks tend to react to escalation headlines. Airlines and consumer names tied to fuel costs tend to fall.
Watch three data points this week: any confirmation Iran actually shows up in Islamabad, Trump's posture after the Wednesday deadline, and shipping traffic through Hormuz.
The takeaway
The weekend raised the risk of a hot war resuming. Markets are pricing some of that risk back in.
If the ceasefire holds past Wednesday, oil likely eases. If talks collapse, the next move in crude and defense names could be sharp. Size positions for both outcomes.
