Reported by Simon Daniel Yusuph l Journalist at Weng Global
Global oil prices rose sharply on Monday, September 28, after US President Donald Trump rejected an Iranian proposal for a seven-day truce that Tehran said could lead to the reopening of the strategically important Strait of Hormuz.
The decision renewed concerns over disruptions to global energy supplies and pushed Brent crude above $107 a barrel in early trading, while US West Texas Intermediate (WTI) crude also climbed. Reuters reported that Brent futures rose more than 1% in Asian trading, while other market reports put the early increase at more than 3% before some gains moderated.
The market reaction reflects the importance of the Strait of Hormuz, a major route for crude oil and petroleum products travelling from the Persian Gulf to international markets.
Trump Rejects Iranian Truce Proposal
Iran had proposed a seven-day truce linked to the reopening of the Strait of Hormuz, according to reports on the diplomatic initiative.
The proposal emerged during the United Nations General Assembly in New York, where Iranian officials sought to create conditions for renewed diplomacy with Washington.
Reuters reported that Iran had expressed readiness to reopen the waterway within a week if the United States reduced military pressure and lifted its blockade of Iranian ports. Tehran had transmitted the proposal through mediators as part of efforts to end the conflict.
Trump rejected the proposal over the weekend but indicated that discussions with Iran could continue.
The Guardian reported that the US president had rejected an Iranian proposal involving the reopening of the Strait of Hormuz and a resumption of nuclear negotiations in exchange for the lifting of the US naval blockade of Iranian ports.
Al Jazeera reported that Trump’s position reflected his demand for what he considers a more comprehensive agreement rather than an immediate limited arrangement.
Oil Markets React to the Decision
Oil traders responded quickly to the breakdown in expectations of an immediate reopening of the waterway.
Brent crude futures rose above $106 a barrel, with Reuters reporting Brent at $106.14 by 2202 GMT on September 27, up $1.82, or 1.74%. WTI was trading at $93.55 a barrel, up $1.14, or 1.23%, at the time.
By early Monday trading, Brent had moved above $107 a barrel as markets assessed the possibility that disruption around the Strait of Hormuz could continue.
Euronews, citing Associated Press reporting, said oil prices jumped more than 3% early Monday, while stocks and bonds weakened as investors reassessed the prospects for restoring normal energy flows through the waterway.
The movement shows how quickly geopolitical developments involving Iran, the United States and the Strait of Hormuz can affect energy markets.
Why the Strait of Hormuz Matters
The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the Arabian Sea and is one of the world’s most important oil transit routes.
Data from the US Energy Information Administration shows that oil flows through the strait averaged about 20.9 million barrels per day in the first half of 2025, equivalent to roughly one-fifth of global petroleum liquids consumption and about one-quarter of global maritime oil trade.
The waterway is particularly important for Asian economies.
The EIA estimates that about 89% of crude oil and condensate transported through the Strait of Hormuz went to Asian markets in the first half of 2025. China, India, Japan and South Korea together accounted for about 74% of those flows.
This means that prolonged disruption could affect not only producers and consumers in the Middle East but also major economies across Asia and global energy markets.
The strait is also important for liquefied natural gas. About one-fifth of global LNG trade travelled through Hormuz in 2024, primarily from Qatar.
Supply Disruption Already Weighing on Markets
The current oil market situation is occurring against a backdrop of significant disruption to energy flows.
EIA data for 2026 shows that oil transit through the Strait of Hormuz fell sharply, averaging 14.9 million barrels per day in the first quarter and just 4.9 million barrels per day in the second quarter. The figures illustrate the extent to which regional conflict has affected flows through the waterway.
Alternative routes exist, including Saudi Arabia’s East-West pipeline and the United Arab Emirates’ pipeline system, but the EIA has noted that these alternatives can carry only part of the volumes normally transported through Hormuz.
That limited capacity is one reason markets remain sensitive to developments surrounding the waterway.
Inflation Concerns Return
The rise in crude prices is also reviving concerns about inflation.
Higher oil prices can increase the cost of transportation, manufacturing, electricity generation and other energy-intensive activities. Businesses may pass some of those additional costs to consumers, particularly if elevated energy prices persist.
The impact can be especially significant for countries that import large quantities of crude oil or refined petroleum products.
For African economies, including Nigeria, changes in international crude prices can have broader implications for fuel markets, government revenue, foreign exchange and household costs.
Nigeria’s position as a major oil producer means higher crude prices can increase export earnings and government oil revenue, although the effects on consumers and domestic fuel prices depend on factors including exchange rates, domestic refining capacity, petroleum pricing arrangements and international product prices.
Financial Markets Also Under Pressure
Oil was not the only market affected by the renewed uncertainty.
Reports on Monday indicated that bond yields also moved higher while equity markets were mixed as investors considered the possibility of prolonged energy disruption and renewed inflationary pressure.
Persistent increases in energy prices can complicate monetary policy decisions because central banks may face renewed inflationary pressure at a time when they are also attempting to support economic growth.
However, the eventual economic impact will depend heavily on how long the disruption lasts, how much oil remains available through alternative routes and whether diplomatic efforts eventually lead to a reopening of Hormuz.
Diplomatic Efforts Remain Possible
Despite rejecting Iran’s seven-day proposal, Trump has indicated that talks with Tehran could continue.
A Reuters report from September 22 said Trump had stated that discussions with Iran were continuing and that he believed a settlement could eventually be reached.
Iran has also continued to signal an interest in diplomacy, while maintaining that the United States must take steps to reduce military pressure and ease restrictions before the Strait of Hormuz can be reopened.
The competing positions leave markets closely watching diplomatic developments alongside military and shipping activity in the region.
What Happens Next
The immediate focus for oil markets will be whether the United States and Iran can return to negotiations and whether arrangements can be reached to restore normal shipping through the Strait of Hormuz.
A credible agreement that allows the waterway to reopen could ease supply concerns and reduce some of the geopolitical premium currently reflected in oil prices.
Conversely, continued disruption or further escalation could keep pressure on crude markets and increase concerns about inflation and energy costs.
For now, traders and governments are watching both the diplomatic process and physical oil flows through the region. The significance of the Strait of Hormuz means developments there can quickly extend beyond the Middle East and affect consumers, businesses and economies worldwide.
Weng Global – stories beyond borders
Sources
- Reuters
- Associated Press
- U.S. Energy Information Administration
- Al Jazeera
- The Guardian
- Euronews
