Oil prices rallied sharply on Monday after President Donald Trump rejected Iran’s response to a US peace proposal as “unacceptable,” raising fears over supply disruptions with the Strait of Hormuz still largely closed. Brent crude climbed to US$103.99 a barrel, while US West Texas Intermediate rose to US$97.66, both having touched higher levels earlier in the session. This rebound followed last week’s 6% losses, which were driven by hopes of a ceasefire that would reopen oil transit routes.
Analysts noted that despite ongoing back-channel talks, the US and Iran remain far from agreement. Trump is expected to discuss the issue with Chinese President Xi Jinping during his upcoming visit to Beijing. Saudi Aramco’s CEO Amin Nasser warned that the world has already lost about one billion barrels of oil over the past two months, and even if Hormuz reopens, it will take months for supply to normalize.
Saudi crude exports to China are expected to decline further in June as buyers cut orders due to high prices and reduced availability. Meanwhile, shipping data showed three tankers exiting Hormuz last week with trackers switched off to avoid Iranian attacks, including one bound for Vietnam with Iraqi crude. Japan is set to receive its first Central Asian oil cargo since the conflict began, with Azerbaijani crude arriving this week.
Market analysts expect Brent to remain above US$90 per barrel through 2026, with prices stabilizing around US$80–85 into 2027 as demand grows and inventories rebuild. In response to uncertainty, US producer Diamondback Energy hedged against a potential export ban by buying options tied to the widening price gap between Brent and WTI, a move that could pay off if domestic crude inventories rise and WTI prices fall further.
