Global oil prices rose by more than 3% after US President Donald Trump rejected Iran’s proposal aimed at ending the conflict and reopening the Strait of Hormuz.
Brent crude futures rose by $3.98, or 3.82%, to $108.30 a barrel. US West Texas Intermediate crude also gained $3.52, or 3.81%, reaching $95.93 a barrel.
Hamad Hussain, senior climate and commodities economist at Capital Economics, said the increase appeared to be linked to Trump’s rejection of Iran’s proposal.
“Oil prices appeared to have jumped on the back of President Trump rejecting Iran’s peace proposal,” Hussain said.
Iran announced its proposal during the United Nations General Assembly in New York last week, saying it had been conveyed to the United States through Qatari mediators.
Trump said on Saturday that he had rejected the proposal. However, during an interview with Axios on Sunday, he said he expected US negotiators to hold further talks with Iran this week.
Hussain said increased oil flows through the Strait of Hormuz could ease some pressure on prices, but the broader oil market continued to face a supply shortage.
“While greater flows through the Strait of Hormuz are easing some of the upward pressure on prices, the bigger picture is that the oil market remains in a deficit,” he said.
Meanwhile, tensions elsewhere in the region continued, with the Saudi-led coalition operating in Yemen saying on Saturday that it had intercepted two ballistic missiles and two drones launched by the Iran-backed Houthis towards Saudi Arabia.
Preliminary data from Kpler released on Monday showed that crude oil exports from major Middle Eastern producers increased in September to 12.8 million barrels per day.
That was the highest level recorded since the war began in February, mainly as Saudi Arabia and the United Arab Emirates increased their oil exports.
The rise also came as crude shipments through the Strait of Hormuz recovered.
Kpler data showed that around 7.4 million barrels per day were expected to pass through the strategic waterway this month.
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