LONDON — Brent crude briefly climbed above $107 a barrel on Monday as uncertainty over the conflict between the United States and Iran kept pressure on global oil supplies, before gains eased as Qatar moved to broker fresh discussions aimed at reopening the Strait of Hormuz.
Brent futures rose by more than $4 a barrel in early trading after US President Donald Trump rejected an Iranian proposal aimed at reopening the strategic waterway. Prices subsequently pared the gains as expectations grew that Qatari mediators would hold separate discussions with Washington and Tehran. Brent ultimately settled at $105.28 a barrel, according to Reuters.
The sharp intraday movement highlights the sensitivity of the oil market to diplomatic developments around the conflict, with traders weighing the risk of prolonged disruption against the possibility of a negotiated reopening of the Strait of Hormuz.
Qatar pushes for renewed negotiations
Qatari mediators were expected to hold separate meetings with Iranian Foreign Minister Abbas Araghchi in New York and US representatives on Monday or Tuesday, according to an official briefed on the negotiations.
The talks were expected to centre on an amended version of a seven-day proposal put forward by Iran during the United Nations General Assembly in New York.
Iran’s semi-official ISNA news agency confirmed that Araghchi would meet Qatari mediators to examine new proposals and developments surrounding the conflict.
The diplomatic initiative followed Trump’s rejection of Tehran’s initial proposal, although the US president subsequently indicated that Washington remained open to further discussions.
The development helped limit the oil market’s initial reaction to the rejection of the Iranian proposal.
Hormuz remains central to oil market risk
The Strait of Hormuz remains the critical issue for energy markets.
The waterway is one of the world’s most important energy chokepoints, carrying a significant share of global oil and LNG flows under normal conditions. Disruptions since the escalation of the US-Iran conflict have forced energy companies and governments to reassess shipping routes, inventories and alternative supply options.
Reuters reported that oil prices had already surged in September as attacks and shipping disruptions heightened fears of tighter global supplies. Brent reached $107.63 a barrel on September 10, while US crude also moved above $100.
More recently, some energy shipments have resumed. Reuters reported that Qatar-linked LNG vessels have increased their visible movements through the Strait in recent weeks, although the broader disruption remains significant.
Iran’s seven-day proposal
Iran’s proposal reportedly envisages a temporary end to hostilities, the reopening of the Strait of Hormuz and a return to negotiations over Tehran’s nuclear programme.
Tehran has also sought the lifting of sanctions affecting its oil exports and the removal of the US naval blockade, among other conditions.
Trump rejected the initial proposal, saying Iran was under economic pressure and seeking a rapid agreement. However, his subsequent comments that US negotiators could hold further discussions with Tehran kept diplomatic channels open.
Iranian officials have maintained that Tehran is prepared to negotiate but would not accept what it regards as coercive terms.
Oil market caught between supply risk and diplomacy
The latest price movements illustrate the two competing forces shaping the oil market.
On one side is the risk that continued disruption around Hormuz will constrain crude and petroleum product flows, increasing freight costs and tightening regional supplies.
On the other is the possibility that successful diplomacy could restore shipping through the waterway and reduce the geopolitical premium embedded in crude prices.
The market reaction on Monday demonstrated that oil traders are responding rapidly to each development. Prices initially jumped following the US rejection of Iran’s proposal before retreating as expectations of renewed mediation emerged.
The impact is extending beyond crude. QatarEnergy has extended force majeure notices affecting LNG deliveries to several European and Asian customers as the disruption around Hormuz continues, adding to competition for alternative gas supplies.
Global energy markets remain exposed
For oil-importing economies, sustained prices above $100 a barrel could increase fuel costs, inflationary pressures and pressure on foreign-exchange reserves.
For oil producers, the price surge provides stronger revenue potential but also increases exposure to the geopolitical and shipping risks surrounding Middle Eastern supply routes.
Nigeria, as a major crude exporter but also an importer of some refined petroleum products, faces a mixed exposure. Higher international crude prices can strengthen export earnings, while elevated global product and freight costs can affect domestic fuel economics.
The immediate direction of crude prices, however, will depend heavily on developments around the Strait of Hormuz and whether Qatar’s mediation produces a framework acceptable to both Washington and Tehran.
As of the latest reports, the renewed diplomatic effort was still developing, leaving the oil market highly sensitive to further announcements from the United States, Iran and Qatari mediators.