Oil Surges Above $104 as Trump Rejects Iran Proposal and Hormuz Risks Intensify

Dubai | EcoPulse24

Oil prices, Brent crude, WTI, Strait of Hormuz, Iran

Global oil prices surged sharply on Monday, with Brent crude climbing above $104 per barrel and US crude nearing $99, after President Donald Trump rejected Iran’s latest response to a US-backed peace proposal, escalating concerns over prolonged supply disruptions through the Strait of Hormuz.

Latest market data showed West Texas Intermediate crude rising to $98.70 per barrel, up 3.44%, while Brent crude advanced to $104.77, gaining 3.43% during the session.

The rally comes as geopolitical tensions continue disrupting shipping flows across the Gulf, with tanker traffic through Hormuz still operating far below pre-war levels despite limited resumptions from Saudi Arabia, the UAE and Qatar.

Trump described Tehran’s latest response as “totally unacceptable,” fueling renewed doubts over the prospects for a near-term diplomatic resolution after nearly eleven weeks of conflict and maritime instability.

The Strait of Hormuz remains one of the world’s most strategically important energy corridors, handling a substantial share of global crude oil, LNG and refined fuel shipments. Any sustained disruption immediately impacts energy prices, inflation expectations and global supply chains.

Saudi Aramco Chief Executive Amin Nasser warned that the market is currently losing around 100 million barrels of supply each week due to ongoing disruptions, adding that normalization may not occur until next year if tensions persist.

Meanwhile, regional security concerns intensified following reports of fresh drone attacks near Qatar and aerial interceptions in the UAE and Kuwait. Israeli Prime Minister Benjamin Netanyahu also stated that the conflict with Iran is “not over.”

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EcoPulse24 Analysis

The latest oil rally suggests markets are no longer treating the Hormuz crisis as a temporary geopolitical shock.

Instead, investors increasingly appear to be pricing in the possibility of a prolonged structural disruption to global energy flows, shipping routes and supply chain stability.

What triggered the latest move was not only the ongoing military tension itself, but also the apparent breakdown of diplomatic momentum after Washington rejected Tehran’s latest proposal.

That combination - military instability alongside diplomatic failure - significantly increases uncertainty across global energy markets.

As Brent moves closer to the mid-$100 range, inflation risks are rapidly returning to the center of macroeconomic concerns, particularly as central banks were already struggling to stabilize long-term price expectations after years of elevated inflation.

Higher oil prices also threaten to push transportation, insurance and industrial input costs upward globally, potentially affecting manufacturing activity, trade flows and consumer prices across multiple economies.

At the same time, the crisis reinforces how tightly interconnected energy markets, geopolitics and monetary policy have become.

Oil is no longer reacting solely to physical supply-demand balances. It is increasingly trading as a geopolitical risk asset tied directly to shipping security, military escalation and diplomatic stability in the Gulf.

And if current disruptions continue into the second half of 2026, global markets could face a far more difficult environment combining elevated energy costs, renewed inflation pressure and slower economic growth simultaneously.