President Donald Trump on Saturday canceled plans to send U.S. envoy Steve Witkoff and Jared Kushner to Islamabad, Pakistan, for negotiations with Iran , throwing oil markets into fresh turmoil and sending international benchmark Brent oil futures briefly to $108.50 per barrel before paring gains to $106.73 by Monday morning .

Trump canceled the U.S. envoy to Islamabad at the last minute on Saturday after Iran refused to hold direct talks , according to CNN. Peace talks have stalled ahead of the war's two-month mark, prolonging oil disruptions and stoking higher gas prices around the world . The collapse in diplomacy comes as Iranian officials warn that the Strait of Hormuz will not return to its previous state under any circumstances, after effectively closing the crucial waterway to oil trade since the start of the war .

According to market data, WTI crude stood at $71.50 per barrel as of Sunday afternoon, up 0.6%, while Brent traded at $75.20, up 0.5%. But those figures don't capture Monday's volatility, when Brent crude rose to $107.58 and US crude climbed to $96.36 in early trading, CNN reported.

Iran has offered a new proposal to the U.S. for reopening the Strait of Hormuz and ending the war while suggesting that nuclear talks be deferred, Axios reported Monday , though the path forward remains uncertain.

Goldman Sachs Raises Oil Forecast to $90 as Supply Shock Deepens

Brent is set to average $90 a barrel in the fourth quarter, up from a previous outlook for $80, analysts including Daan Struyven and Yulia Zhestkova Grigsby said in an April 27 note , according to Bloomberg. Goldman Sachs raised its Q4 2026 Brent forecast to $90/bbl and WTI to $83/bbl, citing 14.5 mln bpd of Middle East output losses driving a record 11-12 mln bpd global inventory draw in April .

The bank's updated forecasts reflect what analysts are calling an unprecedented supply disruption. The bank has estimated lost production in the Middle East at 14.5 million barrels daily as of this month , OilPrice.com reported. The team expects global demand for oil to decline by 1.7 million barrels daily over the current quarter and by some 100,000 barrels daily over 2026 compared to 2025, with Goldman analysts writing that "because extreme inventory draws are not sustainable, even sharper demand losses could be required if the supply shock persists longer" .

The Financial Times reported that Goldman sees a severe upside scenario where if persistent Middle East production losses reach around 2 million barrels per day, Brent could average $115 per barrel in the fourth quarter, and if the Strait of Hormuz remains mostly shut for another month, Brent could average $120 in Q3 and $115 in Q4 .

Shell Bets $16.4 Billion on Canadian Shale as Majors Seek Growth

In a sharp pivot from the geopolitical chaos, British oil major Shell on Monday said it agreed a deal to buy Canadian energy company ARC Resources in an output-boosting deal valued at $16.4 billion , CNBC reported. The transaction will add roughly 370,000 barrels of oil equivalent per day to Shell's portfolio and is designed to increase the London-listed firm's long-term oil and gas production, with Shell CEO Wael Sawan describing ARC Resources, which is focused on the Montney shale basin in British Columbia and Alberta, Canada, as "a high-quality, low-cost and top quartile low carbon intensity producer" that will strengthen the firm's resource base for decades .

The London-based oil major said the deal is expected to generate double digit returns, bolstering long-term cash flows, and is accretive to free cash flow per share from 2027 onwards , according to MarketScreener. The deal is expected to bring annualised synergies of around USD250 million within a year of closing .

The announcement comes as energy supermajors seek to bolster their hydrocarbon resources at a time when they are doubling down on their core business of oil and gas , CNBC noted. The deal marks Shell's largest acquisition in years and signals a strategic bet on North American shale even as oil prices remain elevated by Middle East tensions.

U.S. Sanctions Hit Chinese Refiner Over Iranian Oil Purchases

The Trump administration escalated economic pressure on Iran's oil network Friday, sanctioning one of China's largest private oil refiners over its links to Iran, with the Treasury Department's Office of Foreign Assets Control announcing that it had imposed penalties on Hengli Petrochemical (Dalian) Refinery Co., which operates a modern oil-processing and chemical complex in Liaoning province, citing its purchases from Iran , Bloomberg reported.

China-based independent teapot refineries continue to play a vital role in sustaining Iran's oil economy, and Hengli is one of Iran's largest customers for crude oil and other petroleum products, having purchased billions of dollars' worth of Iranian petroleum , according to the U.S. Treasury Department. Additionally, OFAC is targeting approximately 40 shipping firms and vessels that operate as part of Iran's shadow fleet, whose transportation of petroleum and petrochemicals provides a financial lifeline to Iran's unstable regime .

MarketWatch reported that Hengli Petrochemical, one of China's largest independent refiners, denied any business dealings with Iran after the United States imposed sanctions on one of its subsidiaries for allegedly purchasing Iranian crude . The company's shares plummeted following the announcement, underscoring the financial risks facing firms caught in the U.S.-Iran sanctions crossfire.

Venezuela Overhauls Oil Contracts as Production Remains Constrained

In another development reshaping global oil supply, Venezuela's government has suspended 19 production-sharing agreements with private oil companies, Reuters has reported, citing unnamed sources, with the deals for projects in Lake Maracaibo, the Orinoco Belt, and several mature fields . The agreements would now be reviewed by the Venezuelan and U.S. governments, with some of them possibly ending canceled, the sources also told the publication .

The suspension has had no effect on Venezuela's total oil output, they added , OilPrice.com reported. The country currently produces around 1 million barrels of crude daily, with some of that produced under those production-sharing agreements that are now being frozen and reviewed .

The contract review comes as the Trump administration seeks to revitalize Venezuela's oil sector following the capture of former president Nicolás Maduro earlier this year. However, Venezuelan production could grow if sanctions are removed, but it would require at least several billion dollars of fresh investment to boost marketed production to 1.5 million b/d in the next 12-24 months, and to expand output even more would require much greater spending on infrastructure in addition to upstream development costs, and it would take many years , according to S&P Global Energy CERA.

The combination of stalled Iran diplomacy, aggressive sanctions enforcement, and long-term supply constraints in Venezuela leaves global oil markets facing what analysts describe as one of the most severe supply disruptions in history—even as Shell and other majors position themselves for a hydrocarbon-heavy future.