Brent crude climbs above $107 a barrel after US President Donald Trump rejects Iran’s latest peace proposal, while uncertainty over the Strait of Hormuz keeps supply risks elevated.
NEW DELHI, INDIA — WEB DESK: Global oil prices climbed sharply on Monday as stalled peace efforts between the United States and Iran revived concerns over Middle East supply disruptions and the future of shipping through the Strait of Hormuz.
Benchmark Brent crude futures rose $3.43, or 3.29%, to $107.75 a barrel at 0840 Saudi time, while US West Texas Intermediate crude gained $2.14, or 2.32%, to $94.55 a barrel, according to Reuters.
The renewed rally followed US President Donald Trump’s rejection of Iran’s latest proposal aimed at resolving the conflict and reopening the Strait of Hormuz. Trump nevertheless said he expected US negotiators to hold further talks during the week, indicating that diplomatic efforts had not ended.
Trump told Axios that Tehran wanted an agreement but that the proposal offered was not one he was prepared to accept. The development reduced some of the optimism that had pushed oil prices lower on Friday, when hopes of progress toward a truce helped crude benchmarks fall around 2%.
The Strait of Hormuz remains central to the oil market outlook. Disruption to shipping through the strategic waterway has constrained Middle Eastern energy supplies during the conflict, making crude prices highly sensitive to developments in negotiations between Washington and Tehran.
There have been some signs of improving supply conditions. Reuters reported that Middle East crude exports were recovering during September as oil flows through Hormuz increased. However, the failure to secure a political breakthrough has kept a geopolitical risk premium embedded in crude prices.
Regional security concerns have also remained elevated. A Saudi-led coalition in Yemen said it intercepted missiles and drones launched by the Houthis towards Saudi Arabia, adding another source of uncertainty for energy infrastructure and shipping in the region.
Oil markets have reacted sharply to changing diplomatic signals throughout the conflict. On September 25, prices dropped around 2% as expectations of a possible US-Iran truce strengthened. Monday’s rebound illustrates how quickly sentiment can reverse when negotiations appear to lose momentum.
For energy markets, the next round of US-Iran discussions and developments affecting commercial passage through Hormuz are likely to remain key near-term factors influencing crude prices.
