Hormuz Shutdown Reaches Seven Months: Oil Prices Stay High as Trump Dismisses Iran Proposal
Oil prices increased on Monday as tensions in the Middle East continued to affect markets. This rise follows U.S. President Donald Trump’s rejection of Iran’s proposal to resolve the ongoing conflict and reopen the Strait of Hormuz. The volatility in oil markets has persisted for seven months, stemming from joint U.S. and Israeli strikes on Iran that began on February 28.
Brent crude rose 1.18% to $105.50 a barrel, while U.S. West Texas Intermediate (WTI) gained 0.77% to $93.12. These gains came after Iran presented a peace proposal at the United Nations General Assembly last week, which was communicated to the U.S. through Qatari mediators. However, Trump dismissed the proposal on Saturday, stating in a phone interview with Axios that U.S. negotiators would engage in further talks this week, keeping the door open for renewed discussions.
Tensions in the region escalated further following a statement from Yemen’s Saudi-led coalition. On Saturday, the coalition reported intercepting two ballistic missiles and two drones launched toward Saudi Arabia by the Iran-backed Houthis. Last week, oil performance was mixed; Brent crude edged up 0.4%, while WTI fell 7.9% amid concerns that the U.S. might impose restrictions on diesel exports to lower record prices.
A potential U.S. restriction on diesel exports could decrease refining output domestically and tighten supplies in international markets. European prices are already reacting to the possibility of reduced American diesel availability. Despite ongoing tensions, oil exports from major Middle Eastern producers increased in September. Preliminary Kpler data indicated that crude exports from key producers rose to 12.8 million barrels per day, the highest level since the conflict began in February.
Saudi Arabia and the United Arab Emirates contributed to this increase by boosting their exports. The rise also reflects an uptick in shipments through the Strait of Hormuz, with flows expected to reach about 7.4 million barrels per day this month. Following attacks that damaged its East-West pipeline, Saudi Arabia shifted exports from the Red Sea port of Yanbu to Ras Tanura on its eastern coast, aiding the recovery of shipments through the Strait of Hormuz.
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