Iranian peace proposal falls through, oil prices surge immediately

Oil prices are rising at the start of the new week, reacting to US President Donald Trump’s rejection of Iran’s peace plan. The plan was intended to end the conflict and reopen the Strait of Hormuz. Tensions in the Middle East therefore remain elevated.

At around 7:50 CEST, the price of North Sea Brent crude was up three percent at 107.38 dollars per barrel. US light crude WTI was up 2.1 percent at the same time, trading at 94.32 dollars per barrel.

Last week, the price of Brent crude rose by 0.4 percent, while the price of WTI fell by 7.9 percent. This was due to concerns that the United States might ban diesel exports to ease record-high prices, potentially curbing production at US refineries.

Last week, Iran presented a peace proposal at the UN General Assembly in New York, which was delivered to the Americans through Qatari mediators. Trump said on Saturday that he had rejected the plan. On Sunday, however, he told Axios in a phone interview that he expected US negotiators to continue talks this week.

ANZ analysts warned that geopolitical risks remain high as Yemen’s Houthi rebels and Iran continue attacks on Saudi Arabia. This threatens oil supplies from the region.

The latest data from Kpler show that oil exports from major Middle Eastern producers rose to 12.8 million barrels per day in September. This is the highest level since the start of the war in the Middle East in late February. Saudi Arabia and the United Arab Emirates increased their exports.

The export recovery was linked to the resumption of shipping through the Strait of Hormuz. Exports along this route are expected to rise to around 7.4 million barrels per day this month, as Saudi Arabia redirected its exports from a Red Sea port to an eastern port after attacks damaged its East-West oil pipeline, Reuters reported.

Oil prices in dollars per barrel (around 159 litres)