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Early reaction in Asia was higher

In the first hours of Monday’s Asian trading, oil prices rose on new signals about the direction of the conflict in the Middle East. U.S. crude for November delivery climbed 1.3% to $93.62, while the international benchmark Brent gained 1.8% to $106.31.

The main driver was U.S. President Donald Trump rejecting Iran’s conditional peace proposal to reopen the Strait of Hormuz. Because the Strait of Hormuz is a critical transit route for global energy shipments, every diplomatic and military development in the region is being watched closely by the oil market.

Rejected offer and expectations of fresh attacks

Trump confirmed to reporters that he had turned down Tehran’s latest proposal. According to The Wall Street Journal, citing unnamed U.S. officials, Trump also told his advisers that he expects U.S. attacks on Iran to resume after the November midterm elections.

Trump said, “They made an offer, but I rejected it.”

Other developments raising supply risks in the region

Over the weekend, the Saudi Arabia-led coalition in Yemen said it had intercepted munitions launched by Iran-backed Houthis. The statement also reinforced market concerns that security risks to energy shipping routes remain elevated.

Iran’s conditions and the market’s focus

Iranian Foreign Minister Abbas Araghchi said on Friday on the sidelines of the United Nations General Assembly in New York that the Strait of Hormuz could be reopened within seven days if Washington accepted Tehran’s conditions, and that nuclear talks could then resume. According to Iranian Foreign Ministry spokesman Esmaeil Baghaei, those conditions include an end to what Tehran describes as “aggression,” the lifting of the naval blockade and economic pressure, and the release of Iranian assets.

  • Whether the Strait of Hormuz will reopen
  • What steps the U.S. will take after the November midterm elections

The market is focused on how much the conflict, which began with U.S. and Israeli airstrikes on Iran on February 28, will affect supply. Earlier this month, Trump said the conflict could end shortly after the midterm elections, after which oil prices could ease.

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