Futures linked to the main U.S. averages ticked higher on Monday, while oil continued to climb, as investors assessed ongoing fighting in the Middle East that has entered a second month.

By 06:49 ET (10:49 GMT), the Dow futures contract had added 187 points, or 0.4%, S&P 500 futures had risen by 26 points, or 0.4%, and Nasdaq 100 futures had jumped by 74 points, or 0.3%.

The main averages on Wall Street sank at the end of last week, even after President Donald Trump’s decision to delay until April 6 a deadline for Iran to reopen the Strait of Hormuz or face U.S. attacks on domestic power facilities.

"[M]arkets remain very much on edge about the Middle East, and the consensus view is still that the conflict is set to escalate," analysts at Vital Knowledge said in a note to clients.

A sharp spike in oil since the outbreak of the conflict in late February has sparked worries over renewed inflationary pressures in countries around the world, which could in turn spur on central bank interest rate hikes. Government bond yields have risen against this backdrop, including U.S. Treasuries, weighing on stocks.

Traders are no longer pricing in any rate easing by the Federal Reserve this year, versus expectations for two drawdowns prior to the war, according to CME’s FedWatch Tool. Key labor market and business activity data is due out this holiday-shortened week, and Fed Chair Jerome Powell is set to speak later in the day.

Brent hovers above $115

With the conflict in the Middle East raging, the Wall Street Journal has reported that President Donald Trump is considering a potentially complex and risky military operation to remove almost 1,000 pounds of uranium from Iran.

Meanwhile, troops from the U.S. 31st Marine Expeditionary Unit are said to have arrived in the Middle East, in a move reportedly aimed at giving Trump more options as he mulls over the next phase of the war. A Washington Post report said the Pentagon was preparing for weeks of ground operations in Iran.

Tehran has vowed to destroy any U.S. forces that attempt to stage a ground incursion into the country.

At least 12 U.S. troops were injured in an Iranian attacks on an air base in Saudi Arabia over the weekend. Iran-aligned Houthi rebels in Yemen joined the fray for the first time as well, firing attacks at Israel and exacerbating already heightened fears around disruptions to key energy supplies.

Should the Houthis target the Bab al-Mandab Strait in particular, the Vital Knowledge analysts flagged that a global shipping crisis already caused by the effective closure of the Strait of Hormuz off the southern coast of Iran would be "dramatically amplif[ied]." The Bab al-Mandab Strait is a key choke point for vessel traffic which connects the Red Sea to the Gulf of Aden and the Indian Ocean.

Brent crude futures expiring in May jumped by 2.6% to $115.53 a barrel by 06:55 ET.

Trump says Iran negotiations going "well"

Trump suggested that direct negotiations with Iran were ongoing and that a deal with Tehran could be close.

Speaking to reporters aboard Air Force One, Trump said negotiations were going “extremely well,” and that a deal with Iran was possible, touting “regime change” in Tehran after U.S. strikes killed several top Iranian officials in the past month.

“I think we’ll make a deal with them, but it’s possible we won’t,” the president said. Responding to a reporter’s question, Trump said “I do see a deal with Iran, could be soon,” although he did not offer a specific timeline.

Iran has largely denied that direct talks with Washington had taken place since the onset of the war, and has called for a cessation in hostilities before any negotiations can take place.

Yet, as has been the case for much of the conflict, Trump’s statements came with caveats. Along with the WSJ report of a potential U.S. uranium extraction plan, the president told the Financial Times that he wants to take Iran’s oil and could seize Kharg Island, a major export hub for Tehran.

"Maybe we take Kharg Island, maybe we don’t. We have a lot of options," Trump told the FT.