Oil prices jumped more than 4 per cent on Monday after Iranian Foreign Minister Abbas Araghchi told NBC's Meet the Press that Tehran was prepared for a "doomsday war" with the United States while simultaneously claiming openness to diplomacy. Brent crude surged 4.09 per cent to $108.59 a barrel at 2.48pm UAE time, while West Texas Intermediate rose 4.21 per cent to $96.31 a barrel. Both benchmarks had closed more than 2 per cent lower last week.
The spike came as peace talks between Washington and Tehran remained deadlocked over reopening the Strait of Hormuz, the critical chokepoint through which roughly a fifth of the world's oil passes. President Donald Trump rejected Iran's latest proposal over the weekend, telling Axios in a phone interview Sunday that "they want to make a deal, but it is not the deal that I want to make. It is what we would have maybe agreed to a year ago. They overplayed their hand." When asked whether he was considering resuming strikes against Iran, Mr Trump said, "I am always thinking about it."
Iran's Dual Message: Diplomacy and Destruction
Araghchi's comments to NBC revealed the regime's strategy of simultaneous threats and negotiation. "We are ready for diplomacy. We are ready for war at the same time," he said, adding that Iran had been tested both militarily and diplomatically. "We stand firm in the face of any new aggression, even if it comes to a doomsday war." The rhetoric underscored Tehran's refusal to back down despite the military and economic pressure it's faced since the US-Israel war with Iran began in February.
Mr Trump dismissed an Iranian overture to reopen the Strait of Hormuz with a seven-day plan, but signalled that negotiators would hold further talks with Tehran this week. The impasse has restored what analysts call a "geopolitical premium" to crude prices, reversing Friday's brief relief rally.
The Market's Calculation
Daniel Richards, senior economist at Emirates NBD, said, "Brent is back above $106 a barrel after Friday's brief relief rally faded." He noted that Mr Trump's rejection of Iran's seven-day plan left talks unresolved and pushed prices higher. 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 prices have remained volatile amid talks to end the conflict, as well as reports of Saudi Arabia's East-West pipeline reopening after it was attacked by the Houthi rebels and was shut earlier this month. Some crude has been getting out of the Gulf despite the ongoing tensions.
Supply Routes Reopen, Exports Rebound
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 suggests that alternative export routes and the partial reopening of Saudi infrastructure have mitigated some of the supply disruption, though the Strait of Hormuz remains a critical vulnerability. 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, signalling the industry's expectation that Gulf supply will remain unreliable for the foreseeable future.
Why This Matters:
Iran's refusal to accept terms that would meaningfully reopen the Strait of Hormuz exposes the limits of diplomacy when dealing with a regime that sees brinkmanship as leverage. The Islamic Republic's threats of a "doomsday war" aren't rhetorical flourishes — they're calculated signals that Tehran believes it can extract concessions by keeping global oil markets hostage. President Trump's rejection of Iran's proposal reflects the strategic reality that any deal must address not just the immediate crisis but Iran's broader pattern of aggression through proxy forces like the Houthis, who attacked Saudi infrastructure earlier this month. The fact that oil majors are now accelerating exploration in Africa and South America shows that the industry has concluded the Gulf won't return to stable production anytime soon. That's a direct consequence of Iranian intransigence and the regime's willingness to weaponize energy infrastructure. The market's 4 per cent surge on Monday wasn't just about supply — it was about the recognition that Iran has no intention of backing down without a fight, and that the world will pay the price at the pump until Tehran's leadership calculates that continued confrontation costs more than it gains.