Global oil prices surged sharply on Monday after US President Donald Trump flatly rejected Iran’s counter-proposal to end the 10-week-old conflict in the Middle East, deepening fears of prolonged supply disruptions through the Strait of Hormuz. Trump called Tehran’s response “TOTALLY UNACCEPTABLE” in a Truth Social post on Sunday evening, escalating concerns that diplomatic efforts have stalled and raising the likelihood of further military action. Brent crude futures jumped more than 3% to trade above $104 a barrel, with some reports showing prices hitting $105.50, while West Texas Intermediate rose over 4% to near $99.80 a barrel in Asian trading.
Iran’s terms, delivered through Pakistani mediators, demanded an immediate end to the war on all fronts, an end to the US naval blockade, sanctions relief, the release of frozen assets, and guarantees against future American or Israeli attacks. Tehran also insisted on retaining some control over traffic through the Strait of Hormuz, a position US allies called unacceptable. Iranian President Masoud Pezeshkian maintained a defiant stance, stating on X that dialogue does not mean surrender or retreat. Trump’s swift dismissal underscored the wide gulf between Washington and Tehran, with analysts at MUFG noting it points to prolonged uncertainty rather than rapid de-escalation.
The Strait of Hormuz, which carried roughly one-fifth of global oil and liquefied natural gas flows before the war began on February 28, has remained largely closed due to Iranian threats and attacks on vessels. The world has lost about 1 billion barrels of oil over the past two months, and Saudi Aramco CEO Amin Nasser warned that energy markets will take months to stabilize even if flows resume. Tankers have resorted to switching off tracking devices to transit the waterway, and shipping through the strait remains paralyzed.
Market attention now shifts to Trump’s visit to Beijing on Wednesday, where he is expected to discuss Iran with President Xi Jinping in hopes China can use its influence to push Tehran toward a ceasefire and reopen Hormuz. IG market analyst Tony Sycamore noted that hopes of Chinese intervention could cap gains, but the oil market remains highly sensitive to headlines, with prices swinging on every statement from Washington and Tehran. Stock markets reacted with caution: the Nikkei fell 0.4% and the Hang Seng slipped 0.34%, while Seoul’s Kospi rose 4% on tech strength. Higher oil also lifted inflation worries, pushing the 10-year Treasury yield.
For now, the rejection of Iran’s terms signals that geopolitical risk premiums will persist. As PVM Oil Associates analyst John Evans put it, the US and Iran remain as far from agreement as when the supposed ceasefire started, and normality in oil supply will take many months to return even if Hormuz reopens.
