Brent crude has climbed back above $106 a barrel after US President Donald Trump rejected Iran’s latest proposal to reopen the Strait of Hormuz, putting oil markets on edge again.
Oil had started to settle after signs that Washington and Tehran could find a way forward. That optimism has now been shaken, with the latest disagreement raising fresh questions about when normal oil shipments through the Strait can resume.
Brent rose as high as $107.75 a barrel on Monday, up $3.43, or 3.29%, according to Reuters, before giving up some of the gains. The move comes after oil prices fell last week as markets began to anticipate a possible breakthrough in the US-Iran standoff.
For businesses and consumers, the concern is that, the longer the disruption lasts, the longer fuel markets remain exposed to higher and more unpredictable prices.
Why the Strait of Hormuz matters
The Strait of Hormuz is once again at the centre of the oil story.
Iran had proposed a seven-day arrangement that would allow the Strait to reopen while creating room for further negotiations with the United States. Trump rejected the proposal, saying Tehran had overplayed its hand, although he has indicated that talks could resume this week.
Iran, meanwhile, says it is waiting for a definitive US response through mediators and has not backed away from the conditions it wants addressed.
That leaves the oil market in an uncomfortable position.
There is still oil moving out of the Middle East, but uncertainty remains over how quickly shipments through the Strait can return to normal.
Data cited by Reuters from Kpler showed crude exports from key Middle Eastern producers had recovered to about 12.8 million barrels per day in September, while shipments through the Strait were projected at around 7.4 million barrels per day.
In other words, this is not simply a story about oil suddenly disappearing from the market. It is about how much can move, how reliably it can move, and how long the uncertainty will last.
More pressure from regional security risks
The wider security situation is also keeping markets nervous.
Saudi Arabia has reported intercepting missiles and drones launched by Iran-backed Houthi forces towards the country, adding to concerns around regional energy infrastructure and transportation routes.
Saudi Arabia has also been working to restore alternative routes for moving crude after attacks affected its East-West pipeline.
Then there is the diesel problem
In the United States, Trump has backed the idea of restricting diesel exports as his administration looks for ways to bring down elevated domestic fuel prices.
US Treasury Secretary Scott Bessent has said the administration is examining whether a full or partial restriction could work.
The proposal is attracting attention because the United States is an important supplier of refined fuel to international markets. Cutting exports could therefore have consequences beyond American fuel prices.
Analysts cited by Reuters have warned that restricting US diesel exports could tighten supplies elsewhere, particularly in Europe.
The administration has not announced a final export ban. Reports of an imminent 90-day ban were also denied by a White House official.
For now, the market is watching two things closely.
First, whether US-Iran negotiations resume and produce an agreement that allows the Strait of Hormuz to reopen more normally.
Second, whether Washington moves ahead with restrictions on US diesel exports.
Both developments could influence fuel prices beyond the immediate headlines.
