Brent climbs above $106 as a diplomatic setback revives concerns over prolonged disruption to Gulf energy supplies.
MARKET INSIDER — Oil prices rose more than 1% in early Asian trading on Monday, September 28, after President Donald Trump rejected Iran’s conditional proposal to reopen the Strait of Hormuz and restart nuclear negotiations.
November Brent crude futures gained 1.8% to $106.31 a barrel, while November West Texas Intermediate futures advanced 1.3% to $93.62.
The rejection weakened hopes for a rapid improvement in shipping access through the strategically important waterway. For investors and Asian energy importers, the immediate concern is that disrupted deliveries and elevated transport costs could persist, keeping pressure on inflation and business margins.
Key Highlights
- Brent rose to $106.31 and WTI to $93.62 in early Monday trading after Trump rejected Tehran’s proposal.
- Iran had offered to reopen Hormuz within seven days if Washington accepted conditions covering military pressure, the naval blockade and Iranian assets.
- Reported expectations of renewed U.S. strikes after November’s elections remain distinct from an announced military timetable.
Trump confirms rejection of Tehran’s offer
Trump publicly confirmed on Saturday that he had turned down Iran’s latest proposal, telling reporters: “They made a proposal but I rejected it.”
Reuters separately reported his rejection of the offer to reopen Hormuz and end the fighting.
Iranian Foreign Minister Abbas Araghchi had outlined the initiative on Friday during the United Nations General Assembly in New York. He said the strait could reopen and nuclear talks resume within seven days if U.S. conditions were met.
According to Iranian foreign ministry spokesman Esmaeil Baghaei, Tehran’s demands included an end to what it describes as U.S. aggression, the lifting of naval and economic pressure, and the release of Iranian assets.
The seven-day period was therefore conditional on an agreement. It was never an established reopening date.
Trump’s rejection leaves that proposed route unresolved, although it does not by itself establish that further negotiations are impossible.
Reported strike plans add uncertainty
The Wall Street Journal reported Saturday, citing unnamed U.S. officials, that Trump had told aides he expected strikes on Iran to resume after November’s midterm elections.
That account should be distinguished from Trump’s public confirmation that he rejected the proposal. A reported expectation about future military action is not a formally announced operational schedule.
For markets, however, the possibility of renewed strikes adds uncertainty over how long energy infrastructure and commercial shipping may remain exposed.
Trump had previously said he expected the conflict to conclude shortly after the elections and oil prices subsequently to decline. That remains his forecast, rather than an agreed diplomatic outcome or a reliable timetable for restoring supplies.
Why oil rose after the diplomatic setback
The initial proposal offered a potential path toward safer shipping and more dependable deliveries. Its rejection reduces the immediate prospect of that relief.
Oil prices reflect both available supplies and expectations about future disruption. A diplomatic setback can therefore lift futures even without evidence of an additional physical outage that day.
Monday’s gains are consistent with traders assigning a greater probability to prolonged disruption. They do not establish how much further prices might rise or how much of the move reflects geopolitical risk rather than positioning and other market factors.
The rise also follows a period in which hopes of renewed negotiations had helped ease prices. That sensitivity makes subsequent diplomatic statements capable of producing sharp moves in either direction.
Regional attacks complicate a recovery
Separately, the Saudi-led coalition in Yemen said Saturday that it had intercepted projectiles launched by Iran-backed Houthi forces.
The incident underscores the broader security problem facing regional trade. Even an understanding between Washington and Tehran would need to be assessed alongside threats to Saudi infrastructure and other shipping routes.
Commercial recovery would also require more than a political declaration. Shipowners need confidence in safe passage, insurers must provide workable coverage, and exporters must coordinate vessels, loadings and delivery schedules.
Consequently, a future reopening agreement could influence futures prices quickly while physical trade takes longer to normalize.
Implications for Asian importers
For Asian economies dependent on imported energy, sustained high oil prices can increase import bills and put pressure on transport, manufacturing and household spending.
The effect varies by business. Airlines and logistics operators face fuel-cost exposure, while manufacturers may encounter higher freight and input expenses. Energy producers can benefit from stronger selling prices, although operational disruption can offset that advantage.
Refiners face a more complicated calculation: profitability depends on the relationship between crude acquisition costs and refined-product prices, alongside freight and insurance.
For Vietnam and other regional markets, the relevant measure is therefore the delivered cost of energy over time. A single futures-price movement does not translate immediately or uniformly into domestic fuel prices or company earnings.
What investors should watch next
The first signal will be whether either side offers revised terms or confirms another negotiating channel.
Physical indicators will then help test whether conditions are improving: completed tanker transits, export loadings, cargo delays and the cost of shipping insurance.
Investors should also watch whether higher energy prices persist long enough to affect inflation expectations and interest-rate pricing. A sustained supply shock would create a more difficult environment for bonds and equities than a short-lived rise in crude.
Monday’s trading reflects renewed doubt about a quick settlement. A durable reduction in oil-market pressure will require evidence that diplomacy can deliver safer, more reliable energy flows.
