Oil Surges After Trump Rejects Iran's Response to Proposal to End the War

SadaNews - Oil prices rose after U.S. President Donald Trump rejected Iran's latest response to his proposal to end the war in the Middle East, extending the effective closure of the vital Strait of Hormuz.

Brent crude futures surged by as much as 4.2% to $105.54 per barrel, while West Texas Intermediate rose above $99.

Trump stated in a social media post that the response was "absolutely unacceptable," as both sides struggle to maintain a fragile ceasefire after a series of renewed hostilities.

Potential for Further Oil Price Increases

The near-total closure of the Strait of Hormuz since the war began at the end of February has strangled supplies of crude oil, natural gas, and fuel to global customers, pushing energy prices up and raising inflation concerns. The "International Energy Agency" states that the conflict is causing the largest supply shock in history.

Warren Patterson, head of commodity strategy at ING Groep NV in Singapore, said, "Optimism regarding an imminent agreement between the U.S. and Iran has faded, driving oil prices up." He added, "Concerns over a potential return to escalation are likely to increase, leaving the door open for further price rises."

Tehran had offered to transfer part of its stockpile of highly enriched uranium to a third country but refused the idea of dismantling its nuclear facilities, according to the "Wall Street Journal." Iran objected to the report, according to the semi-official "Tasnim" news agency.

Shipping Attacks and Long-Term Supply Disruption Forecasts

An attack by a drone on Sunday briefly ignited a fire on a cargo ship off Qatar in Gulf waters, marking the latest attack on maritime shipping in the region since the ceasefire began in early April. The UAE and Kuwait stated that they intercepted hostile drones.

For his part, Saudi Aramco's CEO Amin Nasser said on Sunday that the market will not return to normal before 2027 if shipping restrictions through the Strait of Hormuz continue for more than a few weeks. The company redirected some oil flows through the port of Yanbu on the western coast to compensate for lost supplies.

There has been a limited flow of supplies through the strait, as Saudi Arabia and the UAE managed to get several tankers out, but the total flows still account for a small fraction of what they were before the war. Qatar also managed to export its first liquefied natural gas shipment since the conflict began.

"Wall Street" is becoming increasingly convinced that shipping through the Strait of Hormuz will remain disrupted until the second half of the year. A survey by "Goldman Sachs" showed that the majority of participants expected supply disruptions through the narrow waterway to last beyond the end of June.

In an interview on CBS's "60 Minutes" on Sunday, Israeli Prime Minister Benjamin Netanyahu warned that the war with Iran "is not over." He stated that more work is needed to dismantle Iran's nuclear capabilities and eliminate its stockpile of highly enriched uranium.

Trump Pressures China on Iran

Trump is scheduled to meet Chinese President Xi Jinping this week, and U.S. officials said on Sunday that he is expected to pressure the Chinese leader regarding Beijing's approach to Iran.

The revenues that China provides to Iran, along with potential arms exports, will be among the topics of discussion.

More than 4,000 contracts for July Brent crude traded during the first five minutes, compared to an average of less than 1,000 contracts in recent opening sessions.

The spot price differential for global crude also widened, with the gap approaching $4 per barrel in a "backwardation" structure, which indicates supply tightness.