Washington, D.C. (Diplomat.so) – United States President Donald Trump rejected Iran's response to a US-backed proposal aimed at ending the ongoing conflict on Sunday, calling it unacceptable and triggering immediate market concerns that drove oil prices sharply higher at the opening of trading.
The statement, posted on Trump’s Truth Social account, followed days of indirect exchanges mediated through regional intermediaries, including Pakistan, as diplomatic efforts sought to prevent further escalation in the Middle East.
Oil markets reacted within hours of the announcement. Brent crude futures climbed 3.17 percent to 104.50 dollars per barrel, while West Texas Intermediate rose 3.21 percent to 98.48 dollars, according to market data from early Asian trading sessions. Traders said automated systems amplified the upward movement as geopolitical risk premiums were rapidly reassessed.
Iran’s response reportedly demanded the lifting of US sanctions, guarantees against further strikes, recognition of Iranian sovereignty over the Strait of Hormuz, and compensation for wartime damage. It also called for an end to maritime restrictions and broader regional de-escalation involving Lebanon and Israel.
"A senior ICE Futures Europe trader said: ‘The market moved instantly on Trump’s remarks. Liquidity thinned and algorithmic buying accelerated as risk exposure was recalibrated across energy contracts.’”
An Iranian foreign ministry spokesperson stated: "Iran’s position reflects legitimate national security concerns and requires comprehensive guarantees, not partial measures or conditional relief.”
A regional energy analyst, speaking to Diplomat News Network, said the rejection heightened uncertainty in global energy markets. "The key concern is the Strait of Hormuz. Any instability there immediately feeds into global pricing structures and supply expectations,” the analyst said.
The development comes as the United States faces domestic political pressure over rising fuel costs ahead of upcoming midterm elections. NATO allies have also shown limited willingness to support maritime operations without a broader ceasefire agreement and international mandate.
Market observers warn that continued diplomatic breakdowns could sustain elevated volatility in crude prices. With no clear diplomatic roadmap announced, energy traders are preparing for prolonged uncertainty, particularly if tensions around critical shipping lanes persist or escalate further in the coming weeks.
