Oil prices surged in early Asian trade on Monday, May 11, after U.S. President Donald Trump unequivocally rejected Iran’s response to a U.S.-drafted peace proposal.
As of the time of writing, Brent crude was up 3.43%, trading at $104.80 per barrel, while West Texas Intermediate (WTI) had risen to $99.06 per barrel, up 3.65%.
The spike followed a social media post from Trump on Sunday evening in which he described Iran’s response to the proposal as “totally unacceptable.”
The President did not disclose details of Iran’s response, but he has repeatedly warned that if an agreement is not reached quickly, renewed military escalation could be the next step.
The Iranian proposal, submitted on Sunday morning, reportedly called for an immediate end to the war on all fronts, Iran’s management of the Strait of Hormuz, and an end to the U.S. blockade on Iranian exports.
U.S. allies in the region have made it clear that Iranian control of the Strait—or any attempt to impose a toll—would be entirely unacceptable.
In a social media post several hours before rejecting the deal, President Trump accused Iran of “playing games” with the U.S. by using delay tactics, suggesting that his patience with the peace talks may be wearing thin.
Markets will now be focusing on Trump’s visit to Beijing on Wednesday, where discussions are expected to include Iran and whether Beijing will use its influence to help reopen the Strait of Hormuz.
Oil prices remain significantly below last week’s levels, when reports of a potential peace deal first emerged. While there is substantial upside risk if talks completely break down, hopes of Chinese intervention are likely to cap gains in the short term.
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