New clashes between Washington and Tehran have disrupted Wall Street's peace trade, sending oil prices surging. Iranian media reported the country would halt messages with negotiators and pursue a 'complete closure' of the Strait of Hormuz in response to Israel's offensive against Hezbollah in Lebanon.

Benchmark U.S. futures jumped 5.5% to close at $92.16 per barrel. The oil price spike intensified inflation concerns, pushing the 10-year U.S. Treasury yield up to 4.475%. This reversed last week's AI-driven rally that sent major stock indexes to record highs.

Investors now face the stark reality that while Washington pursues peace talks, the worst oil-supply disruption in history continues. 'The actual willingness of both [U.S. and Iran] to negotiate with each other, it just seems questionable,' said Scott Kimball, chief investment officer at Loop Capital Asset Management.