Oil prices surged on Monday after US President Donald Trump rejected an Iranian proposal for a seven day truce, renewing concerns over global energy supplies and fuelling inflation fears.
Brent crude rose more than three per cent, trading above $107 per barrel, while US West Texas Intermediate crude also climbed above $94 per barrel. The increase came after oil prices had fallen by more than two per cent on Friday following news of Iran’s truce proposal.
Iran had proposed a halt in hostilities that could allow the reopening of the Strait of Hormuz, one of the world’s most important energy shipping routes. Tehran has linked the reopening to conditions including the lifting of sanctions on its oil, release of frozen assets and an end to the US naval blockade.
Trump told reporters that he rejected the proposal, although he indicated that negotiations with Iran could resume. Reuters reported that the US president’s rejection contributed to renewed uncertainty over the security of oil supplies.
The rise in crude prices has also increased concerns about inflation, with higher energy costs potentially putting additional pressure on consumers and businesses. Financial markets reacted cautiously, while investors turned their attention to upcoming US inflation and employment data and the Federal Reserve’s next policy meeting.
The latest development leaves global energy markets closely watching the conflict and any possible diplomatic efforts between Washington and Tehran.
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