Oil prices add war premium after Trump statement
Oil prices jumped sharply on Monday after President Donald Trump rejected Iran’s latest proposal to end the conflict in the Middle East. The decision effectively prolongs the closure of the Strait of Hormuz, a critical shipping route for global oil supplies.
Highlights
- Brent crude rose 4.6% to $105.99 a barrel, it has since corrected to $103.85.
- WTI traded near $97.29 a barrel.
- The surge followed Trump’s rejection of Iran’s latest proposal.
- The Strait of Hormuz remains effectively closed, causing major supply disruptions.
Market reaction
Brent crude rose 4.6% to $105.99 a barrel. According to current market data, Brent crude is trading near $103.85 a barrel, up 2.34%.
West Texas Intermediate traded near $97.34 a barrel, up 2.01%, also posting strong gains. Both benchmarks recorded some of their largest daily increases in recent weeks as concerns over prolonged supply disruptions intensified.
Geopolitical сontext
According to Reuters, Trump stated in a social media post that Iran’s response was “completely unacceptable.” Despite a fragile ceasefire, the Strait of Hormuz has remained largely closed since late February. The disruption has caused one of the most severe supply shocks in oil market history, according to the International Energy Agency.
Saudi Arabia and the United Arab Emirates have redirected some shipments, but overall volumes through the strait remain far below pre-conflict levels. Analysts expect prices to stay volatile until a clear resolution on the waterway is reached.
Geopolitics remains
Dominant Force for Oil MarketsThe sharp rise in oil prices underscores how heavily the energy market depends on developments in the Persian Gulf. Even modest signals regarding the reopening of the Strait of Hormuz can trigger significant price swings.
As long as diplomatic efforts fail to restore normal shipping flows, oil prices are likely to remain sensitive to any news from the region, with potential implications for global inflation and economic growth.
In addition, we previously wrote that oil prices plunge more than 7% to two-week lows.
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