Oil prices surged on Monday morning as a standoff between Iran and the US prevented tankers from using the vital Strait of Hormuz waterway.

Brent crude futures were up by 4.74 per cent at $94.66 (£70.11) a barrel, while West Texas Intermediate was 5.6 per cent higher at $88.55.

On Friday, oil prices had dropped back to where they were in the early days of the Iran war, and US stocks raced to a fresh record after Tehran said the strait was open again for commercial tankers carrying crude from the Persian Gulf to customers worldwide.

But on Friday, the Islamic Republic closed the strait again after the US said it would not end its blockade of Iranian ports.

Tehran said the restrictions would remain if Washington did not ‘ensure full freedom of navigation for vessels travelling from Iran to destinations and from destinations to Iran’.

Tensions escalated again on Sunday when Donald Trump announced that the US had intercepted and seized an Iran-flagged cargo ship, the M/V Touska.

Officials claim the ship had attempted to push through the American blockade despite repeated warnings.

A fragile, two-week ceasefire is set to expire Wednesday, while deepening tensions in the Strait of Hormuz raises questions over new talks to end the war.