DUBAI/WASHINGTON, United Arab Emirates — Global oil prices surged Monday after US President Donald Trump rejected Iran’s latest response to a U.S.-backed peace proposal, escalating fears that the ongoing regional conflict could further disrupt energy supplies through the strategically critical Strait of Hormuz.
The latest diplomatic setback intensified concerns over the 10-week-old conflict involving Iran, Israel, and regional armed groups allied to Tehran, including Hezbollah.
Iran’s response, released Sunday, reportedly focused on ending hostilities across the region, particularly in Lebanon, while demanding compensation for war-related damages and insisting on Iranian sovereignty over the Strait of Hormuz.
Iranian media outlets also said Tehran demanded an end to U.S. naval restrictions, guarantees against future attacks, removal of sanctions, and restoration of Iranian oil exports.
Within hours, Trump dismissed the proposal on social media.
“I don’t like it — TOTALLY UNACCEPTABLE,” Trump wrote on Truth Social without elaborating further.
The United States had reportedly proposed a phased de-escalation plan that would first halt fighting before broader negotiations on Iran’s nuclear programme and regional security issues.
Oil markets reacted sharply to the diplomatic deadlock, with prices rising by more than $4 per barrel amid fears that instability around Hormuz could continue choking global energy shipments.
Before the conflict erupted in February, the Strait of Hormuz handled nearly one-fifth of global oil and liquefied natural gas exports, making it one of the world’s most critical maritime trade corridors.
“The oil market continues to trade like a geopolitical headline machine, with prices swinging sharply based on every comment, rejection, or warning coming from Washington and Tehran,” said Priyanka Sachdeva, a senior market analyst at Phillip Nova.
Shipping data from industry trackers indicated that only limited tanker traffic has moved through the strait in recent days. Reports showed at least three crude oil tankers exited the area last week while reportedly disabling tracking systems to reduce the risk of attack.
The conflict is increasingly becoming a political challenge for US President Trump domestically as American consumers face rising fuel costs months before crucial congressional elections.
The United States has also struggled to secure broader international military support for operations aimed at reopening the Strait of Hormuz. Several North Atlantic Treaty Organization allies have reportedly declined requests to deploy naval assets without a broader peace agreement and international mandate.
US President Trump is expected to travel to Beijing later this week, where discussions with Chinese President Xi Jinping are expected to include the Iran crisis and global energy disruptions.
Washington has been urging China to use its diplomatic and economic influence to pressure Tehran into negotiations.
Meanwhile, Israeli Prime Minister Benjamin Netanyahu said the conflict was not over, insisting further action was needed to address Iran’s enriched uranium stockpiles, missile capabilities, and regional proxy networks.
Speaking in an interview aired on 60 Minutes, Netanyahu said diplomacy remained the preferred option for dealing with Iran’s nuclear material but did not rule out military measures.
Iranian President Masoud Pezeshkian responded by declaring that Iran would “never bow down to the enemy” and would continue defending its national interests.
Regional tensions remain high despite diplomatic efforts. Recent days have seen drone interceptions and security incidents involving Gulf states, including the United Arab Emirates, Qatar, and Kuwait.
Clashes between Israel and Hezbollah have also persisted in southern Lebanon despite a U.S.-brokered ceasefire announced in April.
