Oil prices surged and European stock markets retreated after the United States seized an Iranian vessel, undermining optimism over a potential peace agreement.

Brent crude, the global oil benchmark, climbed 4.8 per cent on Monday to $94.69 (£70.07) per barrel.

Across Europe, equities came under pressure. The UK’s blue-chip FTSE 100 slipped 0.7 per cent, while France’s CAC 40 and Germany’s DAX each declined by around 1 per cent.

The broader Stoxx Europe 600 index, which tracks leading companies across the region, fell 1.1 per cent.

The market reaction followed an announcement on Sunday by Donald Trump that a US-enforced blockade near the Strait of Hormuz had led to the seizure of an Iranian cargo ship attempting to pass through the strategic shipping route.

He stated, “We have full custody of their ship, and are seeing what’s on board!”

The development fuelled fears that the ceasefire might unravel before talks resume in Pakistan.