LONDON — Oil prices rose sharply on Monday after President Donald Trump rejected Iran’s latest offer to reopen the Strait of Hormuz. The setback threatens to prolong an energy crisis that has lifted costs for businesses and households around the world.
Brent crude, the global benchmark, gained about 2.9% to $107.34 a barrel in early trading. US crude futures for November delivery rose 1.9% to $94.14. Both benchmarks had fallen on Friday as hopes for a diplomatic breakthrough built. Brent settled at $104.32 and West Texas Intermediate at $92.41.
The offer and the rejection
Iran’s foreign minister, Abbas Araghchi, told reporters at the United Nations General Assembly last week that the strait would reopen after seven days if certain conditions were met. Talks with Washington would restart at the same time. According to Iranian officials, the conditions include an end to what Tehran calls American acts of aggression, the lifting of the naval blockade and economic pressure, and the release of Iranian assets.
The Wall Street Journal reported on Saturday, citing unnamed US officials, that Trump had told aides he expects strikes on Iran to resume after November’s midterm elections. Trump later confirmed the rejection to reporters, saying: “They made a proposal but I rejected it.” He has also said he expects negotiations to resume this week. Iran has said it will not ease its terms.
The conflict began on February 28 with US and Israeli air strikes on Iran. Since then, restrictions on traffic through Hormuz have disrupted Gulf supply. Brent is up roughly 71% since the start of the year, and US crude is up about 61%.
New risks on the Red Sea
Shipping worries are not confined to the Gulf. A Saudi-led coalition said on Saturday it had intercepted projectiles launched by Iran-backed Houthi rebels. European reports say the Houthis have also taken control of stretches of Yemen’s coastline, including territory near the Bab al-Mandab Strait. That is another critical chokepoint, and it raises the risk to vessels using the Red Sea.
Why it matters beyond the oil market
Energy is a cost for almost every business, but it weighs hardest on companies that consume fuel in bulk. Airlines, shipping firms, chemical producers and logistics operators typically see margins squeezed when crude stays elevated. Retailers and manufacturers then face pressure to pass on higher freight and input costs.
The wider financial system is feeling it too. Central banks are raising rates to contain inflation driven largely by the energy shock. Government bond yields have climbed to multi-decade highs, and mortgage rates in the United States have moved above 7%. Oil is now a central factor in the interest-rate outlook rather than just a commodity story.
What could change the picture
Traders are watching for a resumption of US-Iran talks this week. Even a limited reopening of the strait would probably cool prices quickly. Last week showed how sensitive the market is: US crude ended the week down about 7.9% on diplomatic hopes, while Brent finished roughly flat.
Analysts also note that prices can move quickly in either direction on headlines alone. Companies planning budgets around fuel costs are, in effect, planning around news from the Gulf.
Prices quoted are from early Monday trading and may change during the session.
