Trump's response to Iran sends oil prices soaring
Photo: What's happening with oil prices (Getty Images)
Oil prices surged on Monday, May 11, after US President Donald Trump called Iran's response to the US peace initiative unacceptable, according to Reuters.
Brent crude rose by $4.16 to $105.45 per barrel. US WTI crude rose by $4.38 to $99.80 per barrel.
Last week, both contracts fell by 6%; at the time, markets were hoping for a quick end to the conflict and the reopening of the Strait of Hormuz.
"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," explains Priyanka Sachdeva, senior analyst at Phillip Nova.
IG analyst Tony Sycamore notes that the market’s attention is now focused on Trump's visit to China. According to him, there is hope that the US President will be able to convince Beijing to use its influence on Iran to achieve a full ceasefire.
Saudi Aramco CEO Amin Nasser states that over the past two months, the world has lost about 1 billion barrels of oil. According to him, even after supplies resume, the market will need time to stabilize.
Analysts at ING believe that even after the acute phase of the conflict ends, the geopolitical premium on oil prices will not disappear, due to the risk of new disruptions in the Strait of Hormuz and the depletion of reserves.
Their forecast:
- Brent will remain above $90 per barrel until the end of 2026
- In 2027, the price will drop to $80–85 per barrel.
Trump rejected Iran's proposals
Donald Trump rejected Iran’s peace proposal. He wrote on Truth Social: "I don’t like it — TOTALLY UNACCEPTABLE".
Pakistan, acting as a mediator, conveyed Tehran’s position to Washington.
On Wednesday, Trump will travel to Beijing for talks with Chinese leader Xi Jinping. Among the topics is pressure on China regarding purchases of Iranian oil: according to US Treasury Secretary Scott Bessent, China buys 90% of Iran’s energy resources and is thus financing terrorism.
Meanwhile, according to Bloomberg, global oil reserves are shrinking at an unprecedented rate.
Morgan Stanley estimates the decline at approximately 4.8 million barrels per day since early March. Diesel reserves in the US have already fallen to their lowest level since 2005.
