Oil futures jumped more than 3% in Asian trading on Monday after U.S. President Donald Trump said Iran’s response to a U.S. peace proposal was "totally unacceptable," a development that kept geopolitical risk in the Gulf region elevated.
As of 19:58 ET (23:58 GMT), Brent futures were trading at $104.43 a barrel, up 3.1%. U.S. West Texas Intermediate crude futures also rose 3.1%, reaching $98.33 per barrel.
Diplomatic standoff
Trump’s public rejection of Tehran’s counterproposal on Sunday reduced hopes for a near-term easing of tensions. The original U.S. framework reportedly called for a 20-year suspension of Iran’s uranium enrichment activities, the removal of highly enriched uranium stockpiles, and the dismantling of certain nuclear facilities in return for sanctions relief and an end to military action.
According to the account of Iran’s reply, conveyed via Pakistani mediators, Tehran demanded an unconditional lifting of sanctions, the withdrawal of the U.S. naval presence around the Strait of Hormuz, security guarantees, and formal recognition of Iran’s right to continue some nuclear activity. The Wall Street Journal reported that Iran offered to dilute a portion of its highly enriched uranium and transfer the remainder to a third country.
Shipping and market context
Market participants remain focused on the Strait of Hormuz, which the article states has been largely closed since the start of the conflict. Earlier optimism that Washington and Tehran were close to a temporary agreement to stabilize Gulf shipping routes had driven a pullback in oil prices last week; the latest diplomatic setback reversed that movement.
Heightened uncertainty around shipping lanes and naval deployments is a direct input into oil price swings, as players assess the potential for disrupted flows of crude and refined products.
Diplomatic calendar
The rise in oil prices comes in the run-up to a scheduled visit by President Trump to China later this week, where he is expected to meet President Xi Jinping in Beijing. The summit is likely to cover trade, Taiwan, and the Iran conflict, with Beijing described as an important diplomatic actor because of its economic ties with Tehran.
With talks stalled and major diplomatic meetings imminent, traders and policy watchers will likely continue to monitor statements and movements closely for signs of progress or further escalation.