Oil prices rose about 3% on Monday after US President Donald Trump rejected an Iranian proposal aimed at ending the conflict between Washington and Tehran and reopening the Strait of Hormuz.
Brent crude futures were up $2.98, or 2.86%, at $107.30 a barrel by 1206 GMT, after reaching their highest level since September 15 earlier in the session. US West Texas Intermediate crude rose $2.81, or 3.04%, to $95.22 a barrel.
Hamad Hussain, senior climate and commodities economist at Capital Economics, said oil prices appeared to have risen in response to Trump’s rejection of the Iranian proposal.
Iran presented its peace proposal at the United Nations General Assembly in New York last week, saying it had been transmitted to the United States through Qatari mediators. Trump said on Saturday that he had rejected the plan, although he told Axios on Sunday that US negotiators were expected to hold more talks with Iran this week.
Hussain said increased oil flows through the Strait of Hormuz had reduced some upward pressure on prices, but the wider market remained in deficit.
The latest Kpler data showed crude exports from major Middle Eastern producers rose to 12.8 million barrels per day in September, their highest level since the conflict began in February. Saudi Arabia and the United Arab Emirates were among the producers that increased shipments.
Exports through the Strait of Hormuz were expected to reach about 7.4 million barrels per day this month. Saudi Arabia redirected some crude exports from the Red Sea port of Yanbu to Ras Tanura after attacks damaged its East-West pipeline. Saudi crude exports were on track to reach about 5.4 million barrels per day in September, up from 2.446 million barrels per day in August.
Despite the recovery, regional exports remained about 6 million barrels per day below their February level of 18.8 million barrels per day, highlighting the continuing disruption to Middle Eastern supplies.
Tensions also remain elevated around the Gulf. Yemen’s Saudi-led coalition said it had intercepted two ballistic missiles and two drones launched by Iran-backed Houthi forces towards Saudi Arabia.
Oil markets are also watching refined fuel supplies. European low-sulphur gasoil’s premium over Brent reached a record of about $95 a barrel last week amid concerns over a global diesel shortage and the possibility of US restrictions on diesel exports.
Goldman Sachs said a US diesel export ban could push European wholesale diesel prices higher as Europe and Latin America seek alternative supplies. The bank estimated that each week of an export ban could raise European wholesale diesel prices by about $3 a barrel.
Meanwhile, Ukrainian President Volodymyr Zelenskiy said Ukraine’s military had struck Russian oil facilities in the Krasnodar region, adding another source of uncertainty for global energy markets.
