Oil Prices Rebound as Trump Rejects Iran Peace Proposal

Oil prices rose more than 3 percent on Monday after US President Donald Trump rejected an Iranian proposal aimed at resolving the conflict between Washington and Tehran and reopening the Strait of Hormuz, keeping uncertainty over Middle East energy supplies high.

Brent crude futures gained $3.43, or 3.29 percent, to $107.75 a barrel at 8:40 a.m. Saudi time. US West Texas Intermediate crude rose $2.14, or 2.32 percent, to $94.55 a barrel.

Iran presented its peace proposal last week during the United Nations General Assembly in New York, saying the plan had been delivered to the United States through Qatari mediators. Trump said on Saturday that he had rejected the proposal, although he later told Axios that US negotiators were expected to hold additional discussions this week.

“The rejection has reduced hopes of an immediate breakthrough, although diplomatic efforts have not ended,” said Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet.

Sachdeva said $120 a barrel remained an important level for Brent, while prices could retreat if shipping conditions improve or diplomatic talks make progress.

The latest move followed heightened security concerns in the region. A Saudi-led coalition said on Saturday that it had intercepted two ballistic missiles and two drones launched by Iran-backed Houthi forces toward Saudi Arabia.

Oil markets have also been watching developments in refined fuel supplies. Brent gained 0.4 percent last week, while WTI fell 7.9 percent amid concerns that the United States could restrict diesel exports in an effort to address high domestic prices. Analysts at ANZ said record US diesel prices were increasing inflation concerns and renewing discussion about possible export restrictions.

Any limits on US diesel exports could reduce supplies available to international markets, potentially putting additional pressure on European fuel prices.

At the same time, physical crude exports from major Middle Eastern producers have begun recovering. Preliminary data from energy intelligence firm Kpler showed exports reached 12.8 million barrels per day in September, the highest monthly level since the conflict began in February. Saudi Arabia and the United Arab Emirates were among the countries contributing to the increase.

Shipments through the Strait of Hormuz were expected to reach about 7.4 million barrels per day this month, according to the data. Saudi Arabia has shifted some exports from the Red Sea port of Yanbu to Ras Tanura on the eastern coast after attacks damaged its East-West pipeline, allowing more crude to move through the Gulf route.

The recovery in exports has provided some relief to global supply concerns, although uncertainty over the conflict and the future of shipping through Hormuz continues to influence oil prices.