Oil prices surged by more than 3% following the rejection of an Iranian peace proposal by U.S. President Donald Trump, which aimed at resolving regional tensions and reopening the critical Strait of Hormuz. Brent crude futures rose by $3.98, or 3.82%, reaching $108.30 per barrel, while U.S. West Texas Intermediate (WTI) climbed $3.52, or 3.81%, to $95.93 per barrel.
The increase in oil prices reflects market concerns over the potential for continued disruption in the region despite the possibility of further discussions between U.S. and Iranian negotiators. The rejected proposal was initially presented by Iran at the UN General Assembly and communicated to the United States via Qatari mediators. However, President Trump left the door open for possible future talks, suggesting that negotiations could continue this week.
The stalled peace talks have heightened worries about the security and stability of oil supplies and shipping routes through the Strait of Hormuz, a critical channel for global oil transport. Compounding the situation, tensions remain high as the Saudi-led coalition reported intercepting ballistic missiles and drones launched by the Iran-backed Houthi rebels towards Saudi Arabia.
Despite these tensions, crude exports from major Middle Eastern producers showed an increase in September, with shipments reaching approximately 12.8 million barrels per day. This rise in exports and the recovery of shipments through the Strait of Hormuz have helped alleviate some immediate concerns about supply disruptions.
Market participants continue to closely monitor developments in the U.S.-Iran negotiations and the security of key oil shipping routes, which are key factors likely to influence crude prices in the coming days.