Crude Surges Past $106 as U.S. Rejects Truce and Strait Negotiations Stall

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Oil prices surged again on September 28 as hopes for a quick resolution to the U.S.-Iran conflict weakened and uncertainty surrounding the Strait of Hormuz returned to the center of global energy markets.

Brent crude climbed above $106 per barrel during Monday trading and briefly moved beyond $108. West Texas Intermediate also approached $96 before both benchmarks gave back part of their gains later in the session.

Oil Rebounds After Friday’s Decline

The rally followed a very different market mood at the end of the previous week.

On September 25, Brent had settled at $104.32 and WTI at $92.41 as traders responded positively to reports that Washington and Tehran could move toward a truce.

Those expectations changed over the weekend after President Donald Trump rejected Iran’s latest proposal aimed at ending hostilities and reopening the Strait of Hormuz.

The reversal quickly restored part of the geopolitical risk premium that had recently disappeared from crude prices.

Iran’s Seven-Day Proposal Falls Short

Iran had presented a seven-day proposal during UN General Assembly week, with the plan transmitted to the United States through Qatari mediators.

The proposal involved steps toward reopening the Strait of Hormuz and restarting negotiations for a broader settlement.

Trump publicly rejected the offer, saying the agreement wasn’t one he was prepared to accept.

However, the rejection didn’t completely end diplomatic efforts. Trump also indicated that he expected U.S. negotiators to continue talks with Iran.

Brent Pushes Above $108

Oil’s initial reaction was significant.

Brent climbed as high as $108.30 during September 28 trading, while WTI reached approximately $95.93.

Later in the session, Brent was trading around $106.60 and WTI around $94.11 as traders continued assessing the chances of a diplomatic breakthrough.

The rally demonstrated how sensitive crude remains to even small changes in expectations surrounding Hormuz.

More Oil Is Moving Through Hormuz

Interestingly, the price increase came even as Middle Eastern crude exports showed signs of improvement.

Preliminary Kpler data indicated exports from major regional producers reached approximately 12.8 million barrels per day in September, their highest level since the conflict began in February.

Shipments through the Strait of Hormuz were also expected to reach around 7.4 million barrels per day during the month.

Those flows remain below pre-conflict levels, however, leaving the market vulnerable to renewed disruption.

Diesel Adds Another Complication

Crude isn’t the only part of the energy market experiencing pressure.

Diesel supplies have become particularly tight following disruptions connected with conflicts in the Middle East and Ukraine, alongside export restrictions elsewhere.

Washington has also discussed potentially restricting U.S. diesel exports in an attempt to ease domestic prices.

Such a move could lower availability for international buyers, particularly in Europe and Latin America, potentially shifting pressure from crude markets toward refined fuels.

Prices Retreat From Their Highs

Despite the dramatic early rally, oil didn’t hold all of its gains.

Qatari mediators were expected to continue separate discussions with U.S. and Iranian officials, reviving some hope that negotiations could resume.

By settlement, Brent finished at $105.28 per barrel while WTI closed at $92.60.

The movement showed just how quickly diplomatic headlines can move energy markets.

Hormuz Remains the Key Risk

Before the conflict, roughly one-fifth of global oil supply passed through the Strait of Hormuz.

That makes any agreement capable of restoring normal commercial traffic potentially significant for energy prices.

For now, more crude is moving through the region, but flows haven’t completely normalized. Until negotiations produce a lasting arrangement, oil prices are likely to remain highly responsive to every development surrounding the strait.