Oil prices surged on Monday after U.S. President Donald Trump condemned Iran's response to a proposed peace plan as 'totally unacceptable,' escalating tensions in the Middle East and fueling concerns about prolonged supply disruptions. Brent crude, the international benchmark, rose by as much as 4% to $105.50 a barrel before settling at $103.50.
Trump Rejects Iranian Overture
The U.S. had presented a 14-point memorandum of understanding a week ago, aimed at reopening the Strait of Hormuz and setting a framework for further talks on Iran's nuclear program. Iran's counter-proposal reportedly suggested a shorter moratorium and refused to dismantle its facilities. Trump posted on Truth Social on Sunday evening: 'I have just read the response from Iran's so-called representatives. I don't like it – totally unacceptable.'
Market Reactions
The rejection heightened fears that oil prices could remain elevated as the Strait of Hormuz, through which 20% of global oil and gas supply passes, stays effectively closed. Susannah Streeter, chief investment strategist at Wealth Club, noted: 'While there's some expectation that a major reignition of the war is less likely, severe supply constraints of commodities are set to continue.'
In the UK, government borrowing costs rose amid inflation fears. The yield on 30-year gilts increased by 7 basis points to 5.64%, while the 10-year yield rose 5 basis points to 4.96%. European stock markets showed mixed results: the FTSE 100 edged up 0.2% with oil giants BP and Shell among top risers, while the French CAC 40 fell 0.5% and the German Dax dropped 0.9%.
Asian markets were mixed. Japan's Nikkei fell 0.4%, Hong Kong's Hang Seng dropped 0.3%, but China's Shanghai Composite rose 1% after data showed factory gate prices increased 2.8% year-on-year in April. South Korea's Kospi surged 4.3% on gains in Samsung Electronics.
Upcoming Trump-Xi Meeting
Trump is scheduled to meet Chinese President Xi Jinping in Beijing this week, marking the first U.S. presidential visit to China in nearly a decade. Discussions are expected to cover trade, Taiwan, and China's role in the Middle East conflict.
