Oil prices rise sharply on Monday after US President Donald Trump rejected Iran’s latest response to a peace proposal, deepening fears of renewed conflict in the Middle East.

The move unsettled global energy markets as tensions continued around the Strait of Hormuz, a key route for global oil and gas shipments. Iran’s response, delivered through Pakistani mediators, focused on ending hostilities and securing shipping routes, according to reports from Iranian state media cited by Al Jazeera.

Oil prices rise as peace talks hit an impasse

Trump said on Truth Social that he had read Iran’s response and did not like it, calling it “totally unacceptable”, according to the provided source article. The rejection followed weeks of negotiations aimed at extending a fragile truce and moving towards a broader settlement.

The market reaction was swift. The provided source reported that Brent crude rose 2.69% to $104.01 a barrel for July delivery, while Euronews reported that Brent and US crude climbed more than 4% in early trade on Monday.

Iran’s response was sent through Pakistan and reportedly included a focus on ending the war “on all fronts” and ensuring maritime security in the Gulf and the Strait of Hormuz. Al Jazeera also reported that Iranian state media said the first stage of talks would focus on ending hostilities and securing Gulf shipping.

Strait of Hormuz remains central to oil market fears

The Strait of Hormuz remains a major concern for energy traders because a fifth of global oil and gas supply passes through the waterway, according to Al Jazeera. Any prolonged disruption could affect fuel prices, shipping costs and inflation in import-dependent economies.

The provided source reported that Iran had earlier imposed a blockade on the strait and later set up a payment mechanism for ships crossing it. US officials have said it would be unacceptable for Tehran to control an international waterway.

Britain and France have been working on plans for an international effort to secure the strait after a peace deal. However, Iran warned that any deployment of foreign warships would face an immediate response, while French President Emmanuel Macron said France had not planned a naval deployment in Hormuz, but a security mission coordinated with Iran.

Nuclear dispute adds pressure to negotiations

Israeli Prime Minister Benjamin Netanyahu told CBS’s “60 Minutes” that the conflict could not end while Iran still held enriched uranium and operated nuclear facilities. He said Iran’s enriched uranium would have to be removed and its enrichment sites dismantled before the war ended.

The Guardian reported that the US proposal sought a long-term halt to uranium enrichment, removal of highly enriched uranium and the dismantling of nuclear facilities. Iran opposed dismantling its nuclear infrastructure and proposed less stringent controls, according to the same report.

Meanwhile, Iranian President Masoud Pezeshkian said Iran would not “bow down to the enemy”, adding that dialogue did not mean surrender. His comments signalled that Tehran would continue talks while resisting demands it views as excessive.

Regional incidents add to uncertainty

Fresh drone incidents in the Gulf added to fears that the ceasefire could weaken further. The United Arab Emirates said its air defences engaged two drones launched from Iran, while Kuwait reported hostile drones in its airspace and Qatar said a freighter arriving from Abu Dhabi was hit by a drone.

No immediate claim of responsibility was reported. However, an Iranian parliamentary security official warned that Iran’s “restraint is over” and said any attack on Iranian vessels would trigger a strong response against US ships and bases.

For South African consumers and businesses, sustained oil price gains could add pressure to fuel costs, transport expenses and inflation. Therefore, the next stage of US-Iran talks and any developments in the Strait of Hormuz will remain important for global markets.