Oil Prices Climb Amid Iran-U.S. Deadlock and Record Low Inventories

Oil prices rose Monday as the deadlock in Iran-U.S. talks fans fears of an extended supply crunch, while experts point to record low inventories.

International benchmark Brent crude futures for July gained 1.27% at $110.65 a barrel. U.S. West Texas Intermediate futures for June advanced 1.75% at $107.26 per barrel.

U.S. President Donald Trump's warning to Iran over the weekend signals that the impasse between Washington and Tehran over a peace deal and reopening the Strait of Hormuz could lead to a resumption in armed conflict.

Trump said a Truth Social post on Sunday that "For Iran, the Clock is Ticking, and they better get moving, FAST, or there won't be anything left of them," adding that "TIME IS OF THE ESSENCE!"

While a fragile ceasefire was reached in April, tensions between Iran and the U.S. continue with Tehran keeping the Hormuz waterway mostly closed, while the Trump administration continues to blockade Iranian ports.

The strait, prior to the war, saw nearly a fifth of the world's oil and gas supply flow through it.

The International Energy Agency, in its latest monthly update, cautioned that oil inventories globally are depleting at a record pace as the Strait of Hormuz remains closed. "Rapidly shrinking buffers amid continued disruptions, may herald future price spikes ahead," the IEA said.

Inventories will near all-time lows of 7.6 billion barrels by end-May, if demand for oil remains the same month over month, according to a report by Swiss bank UBS last week.

—CNBC's Garrett Downs and Spencer Kimball contributed to the report.