Oil prices jumped more than 4 percent on Monday as diplomatic efforts to reopen the Strait of Hormuz — the narrow waterway through which a fifth of the world's oil passes — remained deadlocked, leaving millions dependent on Gulf energy exports in limbo. Brent crude rose 4.09 percent to $108.59 a barrel by mid-afternoon UAE time, while West Texas Intermediate climbed 4.21 percent to $96.31. Both benchmarks had fallen more than 2 percent the previous week.
The surge followed US President Donald Trump's rejection of an Iranian proposal over the weekend to reopen the strait, which has been partially closed since the US-Israel war with Iran began in February. In a phone interview with Axios on Sunday, Mr Trump dismissed Tehran's offer as insufficient. "They want to make a deal, but it is not the deal that I want to make," he said. "It is what we would have maybe agreed to a year ago. They overplayed their hand." Asked whether he was considering resuming strikes against Iran, Mr Trump said, "I am always thinking about it."
Threat of Renewed Conflict
Iranian Foreign Minister Abbas Araghchi responded by saying Tehran was prepared for both diplomacy and war. "We are ready for diplomacy. We are ready for war at the same time," he told NBC's Meet the Press, adding that Iran had been tested militarily and diplomatically. "We stand firm in the face of any new aggression, even if it comes to a doomsday war," he said. The remarks underscored the fragility of negotiations as the strait remains contested, threatening the energy security of countries across Asia and Europe that rely on Gulf crude.
Daniel Richards, senior economist at Emirates NBD, said Brent was back above $106 a barrel after Friday's brief relief rally faded. "US President Donald Trump rejected Iran's seven-day plan to reopen the Strait of Hormuz, leaving talks unresolved and restoring a geopolitical premium to crude, but has signalled that he is still open to making a deal," he said. Kyle Rodda, senior financial market analyst at Capital.com, said Brent remained around $100 per barrel as the market priced in a protracted stalemate between the US and Iran. "As Iran struggles to maintain control of the Strait – potentially a reason why President Trump is less amenable to striking any sort of a deal with the Iranians – the markets are pricing in a less acute supply shock than at the start of the war," he added.
Oil Flows Resume, but Uncertainty Persists
Despite the standoff, some crude has been getting out of the Gulf. September Mideast oil exports rebounded to 12.8 million barrels per day, the highest since the US-Israel war with Iran began in February. The recovery was aided by reports of Saudi Arabia's East-West pipeline reopening after it was attacked by Houthi rebels and shut earlier this month. Still, oil prices have remained volatile amid ongoing talks to end the conflict and persistent uncertainty over when — or whether — the strait will fully reopen.
Cash-rich oil majors are accelerating development of existing assets and increasing exploration in Namibia, Brazil, Angola and Venezuela as part of a post-Iran strategy rethink. The shift reflects a broader recalibration by energy companies seeking to reduce their exposure to Gulf supply risks, even as the region remains central to global oil markets.
Why This Matters:
The Strait of Hormuz isn't just a shipping lane — it's the jugular of the global energy system. Its closure or partial blockade doesn't just raise oil prices; it disrupts economies, strains household budgets, and forces countries to scramble for alternative supplies. The current standoff leaves millions of people vulnerable to energy shocks they can't control, while diplomatic paralysis prolongs the risk of a wider war that could devastate the region. The rebound in September exports offers temporary relief, but as long as talks remain stalled and military threats linger, the world's energy security hangs on the outcome of negotiations between two governments with little trust and enormous stakes. The human cost of continued brinkmanship — in fuel prices, economic instability, and the ever-present threat of escalation — grows with each day the strait remains contested.