Oil prices rebounded on Monday following US President Donald Trump's rejection of a peace proposal from Iran. The proposal, which aimed to resolve the conflict and reopen the Strait of Hormuz, was transmitted to the Americans via Qatari mediators. Trump said he rejected the plan, but expected US negotiators to engage in more talks this week. This development kept tensions in the Middle East elevated, contributing to the rise in oil prices.
Brent crude futures rose $1.32, or 1.27%, to $105.64 a barrel by 0036 GMT, while US West Texas Intermediate crude was at $93.11 a barrel, up 70 cents, or 0.76%. The increase in oil prices was also influenced by the ongoing attacks on Saudi Arabia by Yemen's Iran-backed Houthis. The Saudi-led coalition in Yemen reported intercepting two ballistic missiles and two drones launched by the Houthis towards the kingdom.
ANZ analysts noted that geopolitical risks remain elevated due to the continued attacks on Saudi Arabia, leaving regional supply flows vulnerable. The analysts also highlighted that refined oil products remain a pressure point, with record US diesel prices intensifying inflation risks and prompting renewed debate over potential export curbs. Any restriction on US diesel exports would tighten supply outside the US, with European prices reacting to the prospect of reduced American supply.
Meanwhile, crude oil exports from key Middle East producers rebounded in September to 12.8 million barrels per day, the highest since the war started in February. Preliminary data from Kpler showed that Saudi Arabia and the United Arab Emirates boosted exports, contributing to the rebound. The rebound came following a recovery in shipments via the Strait of Hormuz, which were set to hit about 7.4 million bpd this month.
The recovery in shipments via the Strait of Hormuz was facilitated by Saudi Arabia diverting exports from the Red Sea port of Yanbu to its eastern Ras Tanura port. This diversion was made following attacks that damaged its East-West pipeline. The increase in oil exports from the Middle East helped alleviate concerns about supply disruptions in the region.
Last week, Brent edged up 0.4%, while WTI lost 7.9% on concerns that the US may ban diesel exports to ease record prices, which could curb US refining output. The potential ban on diesel exports has raised concerns about the impact on global supply and prices. Market participants are closely watching the developments in the US-Iran peace talks and their potential impact on oil prices.
The US-Iran peace talks are being closely monitored by market participants, as they have the potential to significantly impact oil prices. The rejection of the peace proposal by Trump has kept tensions in the region elevated, contributing to the rise in oil prices. The ongoing conflict in the Middle East and its impact on oil supply and prices will continue to be a major concern for market participants.
Key points
- US President Donald Trump rejected a peace deal from Iran, keeping tensions in the Middle East elevated and contributing to the rise in oil prices.
- Crude oil exports from key Middle East producers rebounded in September to 12.8 million barrels per day, the highest since the war started in February.
- The potential ban on US diesel exports has raised concerns about the impact on global supply and prices.
