Oil prices rise again as markets doubt U.S. peace plan

Highlights

Brent moved back toward $105 after the market began to doubt the effectiveness of the U.S. peace plan.
The initial drop in oil prices on reports of a possible ceasefire proved short-lived.
Iran has publicly denied that negotiations are taking place, and that is helping restore a high war premium to prices.

According to CNBC, the shift in the market came after the White House, according to media reports, sent Iran a 15-point settlement plan and sought a temporary ceasefire to discuss the proposal. At first, this triggered a sharp drop in oil prices: Brent fell to roughly $99 to $101 a barrel, while WTI slipped into the $88 to $90 range. But the effect was short-lived. The market soon began reversing those losses after Iranian officials publicly rejected claims that negotiations were underway and made clear that they did not see the US initiative as sufficient grounds for de-escalation.

The market is pricing risk, not diplomacy

The main reason for the renewed rise in prices is a lack of confidence in the political signals. For the oil market, what matters is not Donald Trumps statements themselves, but the likelihood of a real recovery in supply flows through the Persian Gulf and a normalization of shipping through the Strait of Hormuz. So far, that has not happened: the conflict continues, strikes have not stopped, and Iran is effectively denying that any negotiation process exists. As a result, traders have once again begun pricing a geopolitical risk premium into oil.

That helps explain why Brent, despite the short-term correction, remains well above pre-war levels. According to the latest market estimates, oil is still trading roughly 35 to 36 percent above where it stood before the first strikes at the end of February. In other words, the market is no longer working from a scenario of a quick settlement. Instead, it is returning to the view that the conflict could drag on and continue to weigh on global crude supply.

The peace plan is not changing market structure

The shape of the oil curve is sending an additional signal. Even when the market receives news about a possible ceasefire, short-term prices remain highly sensitive to any hint of disruption in physical supply.

That suggests traders do not see the diplomatic initiative as strong enough to trigger a rapid reversal in the broader trend.

As long as Iran rejects the negotiating framework and Washington speaks of progress without visible confirmation, the market prefers to hedge against the worst-case scenario.

Geopolitical premium remains the main driver

For global markets, this means oil is responding not to the mere possibility of talks, but to whether those talks are credible. Brent near $105 after a recent pullback to $99 to $101 shows how quickly the market abandons optimism when diplomatic signals are not backed by action.

As long as Tehran denies negotiations and regional supply remains under threat, this is not the beginning of a durable peace. It is a continuation of a high-risk pricing regime.

We have previously highlighted that gold rebounds from 4-month low as oil prices slide.

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