Collapse of US-Iran Peace Talks Pushes Oil Above $108 – THIS

US President Donald Trump’s rejection of an Iranian peace proposal to resolve the conflict and reopen the Strait of Hormuz, a key route for global oil shipments, sent oil prices up more than 3% on Monday.

Uncertainty over a diplomatic solution to the US-Iran conflict has renewed concerns about supply disruptions in the Middle East.

Indeed, Brent crude futures rose $3.98, or 3.82%, to $108.30 a barrel by 959 GMT, while U.S. West Texas Intermediate (WTI) gained $3.52, or 3.81%, to $95.93 a barrel.

Hamad Hussain, senior climate and commodities economist at Capital Economics, reportedly attributed the sudden rise in oil prices to Trump’s rejection of the proposal.

Iran announced the peace proposal last week at the United Nations General Assembly in New York, saying it had been conveyed to the United States through Qatari mediators.

Trump said on Saturday that he had rejected the proposal, but told Axios on Sunday that US negotiators were expected to hold further talks this week.

A depiction of the Strait of Hormuz. Photo credit: Shutterstock.

Despite renewed geopolitical uncertainty, crude exports from major Middle East producers recovered in September, preliminary data from Kpler showed.

Exports rose to 12.8 million barrels a day, the highest level since the conflict began in February, as Saudi Arabia and the United Arab Emirates increased shipments.

Shipments through the Strait of Hormuz are also expected to reach around 7.4 million bpd this month, indicating a partial recovery of the critical shipping route.

Hussain said increased flows through Hormuz had eased upward pressure on prices, but the broader oil market remained short.

“While increased flows through the Strait of Hormuz are easing some of the upward pressure on prices, the bigger picture is that the oil market remains in deficit,” he said.

Further geopolitical risks remain after the Saudi Arabia-led coalition in Yemen said it intercepted two ballistic missiles and two drones launched by Iran-backed Houthi forces towards Saudi Arabia.

Oil markets are also being hit by concerns over global diesel supplies and a possible US ban on diesel exports.

Brent gained 0.4% last week, while WTI fell more than 7% on concerns that restrictions on US diesel exports could reduce refinery output.

The premium of European low-sulfur diesel to Brent crude futures hit a record high of around $95 a barrel last week after Trump championed the idea of ​​limiting U.S. diesel exports to lower domestic fuel prices.

Goldman Sachs said a U.S. diesel export ban could quickly tighten supplies in other regions as Europe and Latin America look for alternative cargoes.

The bank estimated that each week of a U.S. diesel export ban could raise European wholesale diesel prices by about $3 a barrel, or just under 2%.

Meanwhile, the Ukrainian military also struck Russian oil facilities in the Krasnodar region, adding another layer of geopolitical risk to the global energy market.