OIL PRICES SURGE AS TRUMP DISMISSES IRAN’S PEACE PROPOSAL

OIL PRICES SURGE AS TRUMP DISMISSES IRAN’S PEACE PROPOSAL: Oil prices jumped almost 5% on Monday after markets took a stance on an increase in tensions in the Gulf in the wake of US President Donald Trump’s dismissal of Iran’s latest response to his suggestion to stop this Middle East conflict.

Trump refused to accept Iran’s counterproposal to end the conflict, and Israeli Premier Benjamin Netanyahu warned that the conflict between Israel and Iran is “not ended,” raising fears that tensions could get worse and threaten energy supplies.

TRUMP’S BLUNT REJECTION

Trump took to his social media on Sunday night to express his disappointment by writing: “I have just read the reply from Iran’s ‘representatives.’ I’m not a fan.” The response was described by the man as “TOTALLY unacceptable.”

Tehran has responded via Pakistan, which has acted as a mediator between the two sides, requesting an immediate end to the war and assurances of no more American-Israeli aggressions against Iran, according to Iran’s official Tasnim news agency.

Iran’s conditions highlighted the necessity of the removal of US sanctions and a halt to war on all fronts, as well as Iranian administration of the Strait of Hormuz if certain obligations were met.

OIL PRICES SPIKE SHARPLY

International benchmark oil Brent was up 4.1 percent to $105.50 per barrel, whereas US-traded crude was up 4.4 percent to $99.80.

The crucial Strait of Hormuz waterway has been shut down since just after the start of the war on February 28, severely disrupting the global supply of gas and oil. The closure has led to major disruptions to supply chains throughout the world.

Saudi Aramco CEO Amin Nasser warned on Sunday that the world had lost over 1 billion barrels worth of oil in the last two months and that the markets for energy could take a lot of time to recover when exports resume.

BACKGROUND: HOW THE CONFLICT UNFOLDED

A ceasefire was declared in early April to allow for peace talks and was mostly adhered to, despite occasional firing exchanges. On the 21st of April, Trump extended the truce indefinitely to allow Iran time to submit the “unified plan.”

The price of energy has fluctuated wildly since the beginning of the war, and Brent crude has increased to over $100 per barrel after the ceasefire went into force on April 8.

Major energy firms’ profit margins have been seen to rise because the prices of gas and oil have shot up in international markets. BP announced that its earnings during the initial three months of the year nearly doubled, and Shell reported that its profits had risen.

CHINA’S ROLE AND TRUMP’S BEIJING VISIT

Based on US official sources, Trump is expected to arrive in Beijing on Wednesday, and talks between him and Chinese President Xi Jinping are likely to include the current situation with Iran as well as other geopolitical and economic concerns.

Market analysts have noted there is a possibility that Trump will be able to convince Beijing to use its influence over Iran to press for an all-encompassing ceasefire as well as an end to the ongoing disturbances within the Strait of Hormuz.

China’s crude oil imports fell to their lowest levels in more than four years in April, indicating the increasing pressure on global energy supply chains, as continuing unstable conditions in the Middle East affect the world’s biggest oil importer.

WHAT ANALYSTS ARE SAYING

Analyst for market analysis, Senior Priyanka Sachdeva from Phillip Nova, noted that “the oil market continues to behave as a headline machine for geopolitics that can swing sharply in response to every statement or rebuke that comes out of Washington or Tehran.”

ANZ analysts cautioned that even if this acute oil shock subsides by 2026, the threat of another disruption in the Strait of Hormuz, depleted stocks, and weaker coordination are likely to continue as geopolitical risk factors in the prices. Analysts anticipate Brent crude to stay over $90 per barrel by 2026.

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