Oil prices jumped and equities struggled on Monday as Middle East peace talks stumbled and tensions mounted between Iran and the United States.Crude futures shot around seven percent higher after an Iranian news agency announced Tehran had suspended the negotiations with Washington via mediators.The United States and Iran had traded strikes over the weekend and Tehran had insisted that any deal to end the war must cover Israel's escalating offensive into Lebanon.The report by the Tasnim news agency cited the breakdown of the ceasefire and clashes in Lebanon as the reasons for the halt in dialogue."Hopes of further progress in US-Iran talks have been dashed... this has duly resulted in a spike for oil prices, since the combination of this and the weekend's exchange of fire dramatically raises the chances of a fresh round of conflict," said Chris Beauchamp, chief market analyst at online trading and investing platform IG.After the United States and Israel launched strikes on Iran at the end of February, Iran effectively closed the Strait of Hormuz through which a fifth of the world's oil and liquefied natural gas normally flows.While a ceasefire has largely held since mid-April, traffic through the strait has been scant and negotiations have dragged on."Markets know that oil stockpiles are being rapidly run down, and the rosy assumptions around the renewal of supplies involved the straits being open by June," said Beauchamp."No such opening is in sight, and each day brings the crunch point closer," he added.The spike in oil prices sucked the air out of an AI-fuelled stocks rally.Wall Street had been set for a higher open, but the oil price rise sent New York's main three indices lower as trading got underway. The S&P 500 and tech-heavy Nasdaq Composite managed to poke into positive territory, helped by gains of more than four percent in Nvidia shares. The company unveiled earlier Monday in Taiwan a powerful laptop chip for Windows machines, staking its claim in the market for next-generation consumer PCs integrated with artificial intelligence.