Oil prices climbed sharply Monday after President Donald Trump rejected a peace proposal from Iran aimed at resolving their conflict and reopening the Strait of Hormuz, a critical waterway for global energy supplies.
Brent crude futures rose $1.32 to $105.64 a barrel, or 1.27%, by early Monday trading, according to Reuters. U.S. West Texas Intermediate crude gained 70 cents to $93.11 a barrel, or 0.76%. Later trading showed steeper gains, with Brent reaching as high as $108.65 and WTI climbing to $96.31, representing increases of around 4% for both benchmarks.
Iran presented the peace proposal last week during the UN General Assembly in New York, transmitting it to American counterparts through Qatari intermediaries. The plan included a seven-day truce, reopening of the Strait of Hormuz, a halt to all fighting in the region, and the release of frozen Iranian assets.
Trump dismissed the offer in statements to reporters outside the White House on Saturday. "I reject their proposal," he said, characterizing the Iranian position as overplaying their hand. "They want to make a deal, but it is not the deal that I want to make. It is what we would have maybe agreed to a year ago," he told Axios in a phone interview.
The rejection reversed market sentiment that had emerged when Iran announced the proposal, when oil prices had initially fallen. The renewed surge reflects investor concerns about continued supply disruptions and elevated geopolitical tensions in the Middle East.
Despite rejecting the proposal, Trump told Axios he expects negotiations to resume, with indirect talks between Washington and Tehran potentially beginning through Qatari mediators. On Monday, Trump told reporters that American officials held talks with mediators attempting to broker an agreement. "We're going to win, as far as I'm concerned, it's going to be one way or the other," Trump said in the Oval Office. "It's going to go pretty quickly."
Trump linked the military outcome directly to fuel costs, stating that gas prices would "come tumbling down" after a U.S. victory, though he did not specify a timeline for either outcome. He reiterated that preventing Iran from acquiring nuclear weapons remains a key objective of U.S. strategy and said American officials spoke with mediators Monday regarding the nuclear issue.
The conflict has centered on competing demands. Iran has sought to discuss reopening the Strait of Hormuz and addressing the American naval blockade, while the Trump administration has demanded concessions related to Iran's nuclear program. Trump said Washington is making progress through both military means and economic pressure on Tehran and did not rule out additional military strikes.
Middle East exports have shown some recovery despite the tensions. Preliminary data from Kpler indicated that crude shipments reached 12.8 million barrels per day in September, the highest level since the war began, as Saudi Arabia and the United Arab Emirates increased deliveries.