Oil prices surged nearly 4 percent on Monday after U.S. President Donald Trump dismissed Iran’s response to a proposed peace agreement as “unacceptable,” heightening fears of prolonged supply disruptions through the strategic Strait of Hormuz.
Brent crude climbed by US$4.04, or 3.99 percent, to US$105.33 per barrel in early trading, while U.S. benchmark West Texas Intermediate rose US$4.43, or 4.64 percent, to US$99.85 a barrel.
The gains reversed losses recorded last week, when hopes of a breakthrough in negotiations between Washington and Tehran had pushed both contracts down by around 6 percent.
Markets have been rattled for weeks by the conflict involving Iran and the disruption of shipping through the Strait of Hormuz, a critical waterway through which roughly one-fifth of global oil supplies pass.
“The oil market continues to trade like a geopolitical headline machine, with prices swinging sharply based on every comment, rejection, or warning coming from Washington and Tehran,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
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Trump’s comments on Sunday dampened expectations of an imminent ceasefire that could reopen shipping lanes and restore smoother oil flows.
The U.S. president is due to travel to Beijing later this week, where Iran is expected to be among the issues discussed with Chinese President Xi Jinping, according to U.S. officials.
Analysts said investors were closely watching the visit for signs that China, one of Iran’s key economic partners, could help ease tensions.
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“Market attention now shifts squarely to President Trump’s visit to China this week,” said IG market analyst Tony Sycamore.
“There is hope he can persuade Beijing to leverage its influence over Iran to push for a comprehensive ceasefire and a resolution to the ongoing disruption in the Strait of Hormuz,” he added.
Saudi Aramco chief executive Amin Nasser warned on Sunday that the global oil market had already lost about one billion barrels of supply over the past two months because of the conflict and related disruptions.
He said energy markets would need time to stabilise even if shipments through Hormuz resumed fully.
Shipping data from analytics firm Kpler showed that at least three crude tankers exited the Strait of Hormuz last week with tracking systems switched off, a tactic increasingly used by vessels seeking to avoid potential attacks.
The trend highlighted continuing risks to energy supplies from the Middle East despite diplomatic efforts to contain the crisis.
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Analysts at ANZ said geopolitical risks were likely to remain embedded in oil prices even if the immediate shock eased later this year.
“Even if the acute oil shock fades by late 2026, the ongoing risk of renewed disruption in the Strait of Hormuz, depleted inventories and weaker policy coordination is expected to keep a geopolitical risk premium embedded in prices,” the bank said in a research note.
ANZ forecast Brent crude would remain above $90 per barrel through 2026 before easing to between $80 and $85 per barrel in 2027 as inventories gradually recover and demand growth resumes.
Signs of the conflict’s impact are already emerging in Asia, where China’s crude imports fell in April to their lowest level in nearly four years, according to official data released over the weekend.
The decline reflected reduced flows from the Middle East and higher shipping risks, adding pressure to global supply chains and energy costs.
Oil markets are expected to remain volatile in the coming days as traders monitor diplomatic developments ahead of Trump’s talks in Beijing and assess whether any progress can be made toward restoring stability in one of the world’s most important energy corridors.
