Oil prices spike and bond yields jump after Iran says it's stopped negotiating with the US

Oil prices saw a big spike on Monday on news that Iran's negotiators have stopped working with the US, with the nation planning to again block all traffic through the Strait of Hormuz in response to Israel's attacks against the Iranian-backed Hezbollah group in Lebanon.

Brent crude, the international benchmark, jumped nearly 7% Monday morning to trade around $97 a barrel. West Texas Intermediate crude also surged 8% to $94 a barrel.

Oil prices jumped and equities struggled on Monday as Middle East peace talks stumbled and tensions mounted between Iran and the United States.

Crude futures shot around seven percent higher after an Iranian news agency announced Tehran had suspended the negotiations with Washington via mediators.

The United States and Iran had traded strikes over the weekend and Tehran had insisted that any deal to end the war must cover Israel's escalating offensive into Lebanon.

The report by the Tasnim news agency cited the breakdown of the ceasefire and clashes in Lebanon as the reasons for the halt in dialogue.

"Hopes of further progress in US-Iran talks have been dashed... this has duly resulted in a spike for oil prices, since the combination of this and the weekend's exchange of fire dramatically raises the chances of a fresh round of conflict," said Chris Beauchamp, chief market analyst at online trading and investing platform IG.

After the United States and Israel launched strikes on Iran at the end of February, Iran effectively closed the Strait of Hormuz through which a fifth of the world's oil and liquefied natural gas normally flows.

While a ceasefire has largely held since mid-April, traffic through the strait has been scant and negotiations have dragged on.