Iran Truce Rejected: Oil Prices Rocket Past $107

Oil prices surged and bond yields climbed on Monday after President Donald Trump rejected an Iranian offer of a seven-day truce. The move reversed some of the optimism that had lifted markets late last week. Brent crude, the international benchmark, jumped more than 3% and traded above $107 a barrel early Monday morning in Europe, according to Euronews. West Texas Intermediate rose 1% to $93.34 a barrel, while Brent stood 1.8% higher at $106.19, Channels Television reported.

The rejection came just days after Tehran floated a new plan meant to de-escalate tensions and restore normal shipping through the Strait of Hormuz. Traders had priced in some hope that the offer might hold, sending oil lower on Friday. That relief did not last once Trump spoke publicly on Monday.

What Trump Said

Speaking to reporters outside the White House, Trump said, “I reject their proposal,” according to AFP, via Asharq Al-Awsat. He struck a different tone in an interview with Axios published Sunday, where he said he expects negotiations with Iran to resume.

“They want to make a deal, but it is not the deal that I want to make,” he told the outlet. He added that Iran’s terms matched an offer the US might have accepted roughly a year ago, and said Tehran had “overplayed their hand.”

Axios reported, citing sources familiar with the matter, that indirect talks between Washington and Tehran could resume as early as Monday. Trump did not give a timeline for when a formal deal might be reached, and administration officials have not commented publicly on the state of the talks.

The mixed signals from Trump, a public rejection paired with private optimism about a resumed dialogue, left markets unsure how to read the moment. That uncertainty showed up quickly in both oil and bond prices.

Iran’s Truce Proposal

Tehran laid out its truce plan last week at the UN General Assembly. The offer centered on reopening the Strait of Hormuz, a move that would ease the global supply crunch driving up energy costs. The strait remains central to the conflict between the US and Iran, especially as Houthi forces have seized Yemen’s entire Red Sea coastline, including the Bab al-Mandab Strait, another critical shipping route, per Malay Mail.

Iran is still holding firm on its conditions for reopening the strait. These include the release of its frozen assets, the lifting of sanctions on its oil exports, and an end to the US naval blockade. None of these demands has been accepted by Washington so far, and Trump’s comments suggest the gap between the two sides remains wide.

Oil prices had fallen more than 2% on Friday when news of the truce offer first broke, before bouncing back once Trump’s rejection became public. The swing highlights how closely tied energy markets remain to every development in the standoff.

Why the Strait of Hormuz Matters

The Strait of Hormuz is one of the world’s most important energy chokepoints. Roughly one-fifth of the world’s seaborne oil trade passes through this narrow waterway between Iran and Oman, according to the US Energy Information Administration. Gulf producers including Saudi Arabia, Iraq, the UAE, Iran, and Kuwait depend on the strait to move their crude to international buyers.

Asian economies bear the biggest exposure to any disruption. China and India together receive more than half of all crude and condensate that pass through the strait, according to EIA data compiled by Visual Capitalist, making them especially sensitive to prolonged tension in the region. A sustained closure or slowdown at Hormuz would tighten global supply fast, since few alternative routes exist for Gulf exporters to move oil out.

This is why even the possibility of a truce, let alone its collapse, moves oil prices sharply. Markets are not just reacting to the current standoff. They are pricing in the risk that the strait stays a flashpoint for weeks or months to come.

Market Reaction

The rejection rattled more than oil markets. Bond yields rose alongside crude prices as traders weighed renewed inflation concerns. The US 10-year Treasury yield has been climbing steadily since the war with Iran began, when it stood at 3.97%. Japanese 10-year bond yields traded at 3.095% over the same period, Euronews reported.

In Asian currency trading Monday, the US dollar rose to 157.69 yen from 157.19 yen. The euro held steady near $1.1388, little changed from $1.1393. Gold prices fell more than 2%, with bullion trading at $4,220 an ounce, as investors moved away from safe-haven assets and back toward the dollar.

Equity markets were mixed as traders looked ahead to key US economic data due later in the week. Higher oil prices tend to weigh on growth expectations while adding to inflation pressure, a combination that makes central bank decisions harder and often unsettles stock markets.

Stephen Innes, an analyst at Quintex Intel, said Middle East tensions had flared again after Trump’s rejection of Iran’s proposal. He wrote that oil had pushed higher and Asian equities had turned softer, adding that the brief market relief seen on Friday now looked more like a pause than an ending. He said markets are still pricing in some chance both sides eventually return to talks, even after more weeks of public sparring.

What Happens Next

Trump’s comments to Axios suggest the door to negotiations remains open despite the public rejection. Indirect talks could begin within days, according to people familiar with the discussions. Iran has not signaled it will drop its core demands, meaning the standoff over the Strait of Hormuz, and its impact on global oil supply, is likely to continue shaping markets in the days ahead.

Analysts widely expect oil prices to stay volatile until there is clearer progress, one way or the other. Any confirmed date for renewed talks, or any further escalation, is likely to move prices again in the short term.

FAQs

Why did oil prices jump on Monday?

Oil prices jumped after Trump rejected Iran’s offer of a seven-day truce tied to reopening the Strait of Hormuz. The rejection revived concerns about a prolonged supply crunch, pushing Brent crude above $107 a barrel.

What was Iran’s truce offer?

Iran proposed a seven-day halt in hostilities at last week’s UN General Assembly. The plan was meant to reopen the Strait of Hormuz and ease the global energy supply crisis.

What conditions is Iran demanding?

Iran wants its frozen assets released, sanctions on its oil exports lifted, and an end to the US naval blockade before it will reopen the Strait of Hormuz.

Will the US and Iran resume talks?

Trump told Axios he still expects negotiations to resume, and indirect talks could begin as early as Monday, according to people familiar with the matter. No formal date has been confirmed.

How high did oil prices rise?

Brent crude rose more than 3% to trade above $107 a barrel. West Texas Intermediate rose 1% to $93.34 a barrel.

Why does the Strait of Hormuz matter so much to oil prices?

Roughly one-fifth of the world’s seaborne oil trade passes through the strait, and there are few alternative routes for Gulf exporters. Any disruption there tightens global supply quickly.

How did other markets react?

Bond yields rose in the US and Japan, the dollar strengthened against the yen, and gold fell more than 2% as investors moved away from safe-haven assets.