WASHINGTON (dpa-AFX) - Crude oil prices have surged on Monday after the U.S. rejected Iran's proposal to end the war. In addition, oil prices gained support from reports suggesting a rapid depletion in crude oil inventories due to the U.S.-Iran war.
WTI Crude Oil for June month delivery was last seen trading up by $3.33 (or 3.49%) at $98.75 per barrel.
In an effort to end the war between the U.S.-Israeli forces against Iran that broke out on February 28, the U.S. offered a draft plan to Iran last week.
Despite a ceasefire announced by U.S. President Donald Trump holding in place, there were a few skirmishes between the U.S. and Iran that Trump dismissed as insignificant.
According to the U.S. plan, Iran should immediately reopen the critical Strait of Hormuz, and over a 30-day period, both nations should charter a framework for discussing all contentious issues.
However, in a post through Truth Social, Trump called Iran's response as 'totally unacceptable'.
Iran's Foreign Ministry spokesperson stated that the U.S. was placing 'excessive demands.'
CNN reported that Trump said the ceasefire between the U.S. and Iran is now on 'massive life-support' and went on to call it 'unbelievably weak.' Trump reportedly stated that he did not even read Iran's response 'fully.'
Iran's nuclear ambitions, which the U.S. wants Iran to abandon and Iran refuses to do so, remain as the crucial sticking point in the U.S.-Iran negotiation leading to the ongoing standoff.
Oman's foreign minister stated that there is an 'urgent need' to free the stranded ships along the Strait of Hormuz.
With Pakistan-mediated U.S.-Iran negotiations failing to yield any breakthrough so far, the prospects of reopening the strait through diplomacy are diminishing.
Experts are now anticipating the upcoming U.S.-China summit in Beijing, China, where Trump is meeting Chinese President Xi Jinping to offer some resolution to the drawn out war as China has closer ties with Iran.
On the inventory front, in a crucial warning carried by Bloomberg, analysts from Morgan Stanley have observed that if the Strait of Hormuz remains closed through the end of June, most of the market buffers would have been exhausted and result in further increase in crude oil prices.
According to the report, the massive supply disruption caused due to the closure of the strait was partly offset by reduced overall crude imports into China and surging exports from the U.S.
The article cautions that these inventories would vanish soon if the crisis persists through the end of next month.
Last week, Goldman Sachs had warned that a downfall in global oil inventories could hit an eight-year low.
Several ships carrying oil and energy cargo remain stranded at sea with thousands of seafarers trapped inside with inadequate food and water supplies.
On a humanitarian basis, Trump announced Project Freedom, an initiative to safely guide and escort the ships way out of the Strait of Hormuz last week but within 36 hours, called off the endeavor stating that 'good progress' was made in the bilateral U.S.-Iran negotiations.
As inflationary concerns grow stronger, according to the CME Group's FedWatch Tool, traders are anticipating that the U.S. Federal Reserve will hold the rates in its upcoming June 16-17 meeting.
Crude oil being a dollar-denominated commodity, investors are also looking out for the upcoming April month's Consumer Price Index number to derive clues on Fed's monetary policy trajectory.
Separately, despite a ceasefire that went into effect on April 16, the ongoing attacks on Lebanon by Israeli military targeting the Hezbollah militants is adding up to the Middle East tensions.
Copyright(c) 2026 RTTNews.com. All Rights Reserved
Copyright RTT News/dpa-AFX
© 2026 AFX News
