Oil prices pared earlier gains on Monday after Iran said diplomatic contacts with the United States were continuing through mediators despite renewed hostilities in the Middle East.

Crude prices had climbed to their highest level in about a month amid concerns that the conflict could disrupt shipping through the Strait of Hormuz, a vital route that carries roughly one-fifth of the world’s seaborne oil.

Brent crude briefly rose above $91 per barrel, its highest level since June 11, before easing to around $89 per barrel. US benchmark West Texas Intermediate also traded higher after both contracts gained more than four per cent at the end of last week.

Iran’s Foreign Ministry spokesman, Esmaeil Baghaei, said diplomatic channels remained active despite the ongoing exchange of attacks.

“We have received messages—without going into details—but the main point is that the diplomatic apparatus has been active in recent days and ideas have been conveyed to us by certain mediators,” Baghaei said.

The surge in oil prices has renewed concerns that higher energy costs could fuel inflation and complicate efforts by central banks to reduce interest rates.

Stephen Innes of SPI Asset Management said markets were balancing geopolitical risks with signs of easing inflationary pressures in the United States.

He noted that while sustained high oil prices could weaken consumer spending and economic growth, softer US inflation and a cooling labour market suggested the latest energy shock might not trigger a broader inflation cycle.

Asian stock markets closed mixed, with Chinese equities outperforming on expectations of additional economic stimulus from Beijing.

Hong Kong gained more than two per cent, while Shanghai also closed higher. Manila and Jakarta recorded modest gains, but Seoul, Taipei, Sydney, Mumbai, Bangkok, Singapore and Kuala Lumpur ended lower.

In Europe, London traded in negative territory, while Paris and Frankfurt posted slight gains.

Meanwhile, gold slipped 0.25 per cent despite the geopolitical tensions, while silver rose by just over one per cent.