Trump Rejects Iran Proposal as Strait of Hormuz Crisis Pushes Oil Prices Higher

Oil prices surged Monday after former U.S. President Donald Trump rejected Iran’s latest response to a U.S.-backed peace proposal, raising fears that the ongoing Middle East conflict could intensify and further disrupt global energy markets. The continued tensions have kept shipping activity through the Strait of Hormuz severely restricted, threatening one of the world’s most critical oil transit routes.

Iran’s response, released Sunday, focused on ending military conflicts across the region, particularly in Lebanon where Israel continues operations against Hezbollah, the Iran-backed militant group. Tehran also demanded compensation for war damages, removal of sanctions, an end to the U.S. naval blockade, and guarantees against future attacks. Iranian officials additionally reaffirmed sovereignty over the Strait of Hormuz and called for the lifting of restrictions on Iranian oil exports.

Trump quickly dismissed the proposal on Truth Social, calling it “totally unacceptable” without offering further explanation. The U.S. had reportedly hoped to establish a ceasefire before reopening broader negotiations over Iran’s nuclear program and regional security concerns.

The stalled diplomacy immediately impacted global markets. Crude oil prices climbed by $3 per barrel amid concerns that the Strait of Hormuz — responsible for transporting roughly 20% of the global oil supply — could remain effectively closed. Energy analysts warn that prolonged disruptions may trigger higher gasoline prices worldwide and increase pressure on global economies.

Meanwhile, regional tensions continue to escalate. The United Arab Emirates reported intercepting drones allegedly launched from Iran, while Qatar condemned an attack on a cargo ship in its territorial waters. Kuwait also confirmed hostile drones entered its airspace.

Israeli Prime Minister Benjamin Netanyahu stated that military operations against Iran are not finished, emphasizing concerns over Iran’s uranium enrichment, missile capabilities, and regional proxy groups. Iranian President Masoud Pezeshkian responded by vowing that Iran would never surrender and would continue defending its national interests.

With Trump scheduled to meet Chinese President Xi Jinping in Beijing later this week, discussions surrounding Iran, oil supply security, and the Strait of Hormuz crisis are expected to dominate diplomatic talks.