Oil prices are rising today, after US President Donald Trump dismissed Iran’s latest terms to end the war, sparking fears of a fresh escalation in the conflict that would keep the vital Strait of Hormuz shuttered for even longer.
Brent crude, the global oil benchmark, was up 2.9 percent to $104.2 a barrel. WTI, the US benchmark, rose 2.4 percent to $97.7 a barrel.
Trump said Iran’s latest peace proposal was “totally unacceptable,” in a Truth Social post Sunday. Tehran wants its sovereignty over the Strait of Hormuz recognized and has also demanded compensation for war damages, according to Iranian state media.
Trumps’ comments “nudge in the direction of re-escalation – potentially more shooting – but I’d think there is going to be a fresh olive branch,” Neil Wilson, a strategist at Saxo bank wrote in a note.
Crude prices are up around 45 percent, or some $30 a barrel, since the war started, blockading a waterway that is ordinarily a conduit for around a fifth of the world’s global oil and natural gas supply.
While some producers, including Saudi Arabia and the United Arab Emirates, have found alternative routes for their exports, around 10-12 million barrels of crude remain choked off from global markets per day, according to analysts.
“We still think that we are moving towards a deal, but both parties want to have an upper hand in negotiations,” chief European economist at Jefferies, Mohit Kumar wrote in a note. “The longer the Strait of Hormuz remains closed, the more negative it is for the global economy.”
