Oil prices rebounded more than 2% on Monday after U.S. President Donald Trump rejected an Iranian proposal aimed at ending the conflict and reopening the Strait of Hormuz. Brent crude futures rose $2.60, or 2.49%, to $106.92 a barrel at 0803 GMT, while West Texas Intermediate crude gained $2.08, or 2.25%, to $94.49, according to Reuters.
The move followed Trump’s rejection of Iran’s latest peace proposal, which Tehran said had been transmitted through Qatari mediators after being presented during last week’s United Nations General Assembly. The proposal was intended to establish a seven-day truce and allow the Strait of Hormuz to reopen, while Trump said he expected U.S. negotiators to hold further talks with Iran this week. The developments left the outlook for the strategically important waterway uncertain.
The Strait of Hormuz remains central to the oil market because it is a major route for crude exports from the Gulf. Preliminary Kpler data cited by Reuters showed crude exports from key Middle Eastern producers had recovered to 12.8 million barrels per day in September, the highest level since the conflict began in February. However, regional exports remained about 6 million barrels per day below their February level, while shipments through Hormuz were expected to reach about 7.4 million barrels per day this month.
The recovery in regional shipments has provided some relief to the supply outlook, but renewed uncertainty over the waterway has kept a geopolitical premium in crude prices. Saudi Arabia has increased shipments after attacks damaged its East-West pipeline, diverting some exports from the Red Sea port of Yanbu toward its eastern Ras Tanura facility. Reuters reported that Saudi crude exports were on track to reach about 5.4 million barrels per day in September, compared with 2.446 million barrels per day in August.
The latest price move also reverses some of the weakness seen in crude markets during the previous week. Brent gained about 0.4% last week, while WTI fell more than 7% as traders weighed concerns that the United States could restrict diesel exports in an effort to reduce domestic fuel prices. Reuters reported that European low-sulfur gasoil’s premium to Brent reached about $95 a barrel last week amid a broader global diesel supply shortage.
The diesel market is an additional source of pressure for crude and refined-product markets. Goldman Sachs estimated that a U.S. diesel export ban could raise European wholesale diesel prices by about $3 a barrel for each week it remained in place, although that estimate represents the bank’s analysis rather than an announced policy outcome.
Regional security risks have also remained elevated. Yemen’s Saudi-led coalition said it intercepted two ballistic missiles and two drones launched toward Saudi Arabia by Iran-backed Houthi forces, adding another source of uncertainty for energy infrastructure and shipping routes in the region.
The latest oil move follows a series of sharp swings linked to developments around the Strait of Hormuz. Oil flows through the Strait of Hormuz had previously shown signs of recovery as Middle Eastern exporters sought alternative routes and increased shipments.
For crude markets, the immediate focus remains on whether U.S. and Iranian representatives resume negotiations and whether any agreement can restore more predictable shipping through Hormuz. While higher Middle Eastern exports have reduced some of the supply disruption, Reuters cited Capital Economics economist Hamad Hussain as saying that the broader oil market remained in deficit, leaving prices sensitive to further changes in regional supply conditions.
