Oil prices climbed on Monday after US President Donald Trump described Iran’s response to the American peace proposal as “unacceptable,” raising supply concerns as the Strait of Hormuz remains almost completely closed, keeping global oil markets under pressure.

Brent crude futures rose by $2.70, or 2.67%, to $103.99 per barrel by 09:02 GMT. US West Texas Intermediate crude also climbed to $97.66 per barrel, up $2.24, or 2.35%. Earlier in the session, the two benchmarks touched $105.99 and $100.37 per barrel respectively.

Both benchmarks posted weekly losses of around 6% last week amid hopes for a near-term end to the 10-week conflict, which could allow oil shipments through the Strait of Hormuz to resume.

John Evans, analyst at PVM Oil Associates, said: “Reassuring statements about ongoing backchannel communications and talks between the parties do not change our view that the United States and Iran remain as far from an agreement as they were when this so-called ceasefire began.”

He added: “We do not expect any major change before Donald Trump’s visit to China and his request for Beijing’s help in pressuring Iran.”

Trump is scheduled to arrive in Beijing on Wednesday, where he is expected to discuss the Iranian file alongside other issues with Chinese President Xi Jinping, according to US officials.

Saudi Aramco CEO Amin Nasser said on Sunday that the world has lost nearly one billion barrels of oil over the past two months, adding that energy markets would need time to stabilize even if oil flows resume.

Evans added: “We continue to maintain our bullish outlook, and we agree with Saudi Aramco’s view that even if the Hormuz crisis is resolved and the strait reopens, it will take several months for oil supplies to normalize.”

Meanwhile, trade sources told Reuters that Saudi crude exports to China are likely to decline further in June after buyers reduced requested volumes due to higher prices linked to the US-Iran conflict and tighter supplies.

At the same time, data from shipping tracker Kpler showed that three crude oil tankers exited the Strait of Hormuz last week and on Sunday with their tracking systems switched off to avoid Iranian attacks. One of the tankers was carrying Iraqi crude bound for Vietnam.

Japan’s industry ministry also announced that a tanker carrying Azerbaijani crude is expected to arrive as early as Tuesday, marking the first Central Asian oil shipment to arrive since the outbreak of the war with Iran.

Analysts at ANZ Bank expect Brent crude to remain above $90 per barrel through 2026 and trade between $80 and $85 per barrel during 2027, supported by recovering demand growth and gradual inventory rebuilding.

In an attempt to hedge against price volatility and secure revenues, Diamondback Energy purchased options contracts allowing it to sell the spread between US WTI crude and Brent crude at around negative $42 per barrel over the coming months, in a bet that could generate gains if the United States decides to ban oil exports.

Such a scenario would likely lead to rising domestic inventories because US refineries typically process less local crude than total production, potentially pressuring WTI prices and widening the price gap with Brent crude.

The US dollar traded steady on Monday after US President Donald Trump rejected Iran’s response to the American peace proposal, pushing oil prices higher and reviving concerns that the Middle East conflict could continue for a longer period.

The US dollar index, which measures the performance of the US currency against a basket of six major currencies, was little changed at 97.995.

Meanwhile, oil prices surged, with Brent crude futures rising 3.6% to $104.94 per barrel after Trump rejected Iran’s response to the US peace proposal on Sunday, increasing fears that the war, now in its tenth week, could drag on further.

Despite that, markets are still betting on the possibility of a settlement to the conflict, according to Kenneth Broux, head of corporate research for FX and rates at Societe Generale.

Broux said: “I think the reason behind this optimism is China’s involvement,” adding that the upcoming US-China summit later this week is the key event for markets given both countries’ influence in the Middle East.

Markets Await Trump-Xi Summit

Trump and Chinese President Xi Jinping are expected to discuss Iran, Taiwan, artificial intelligence, nuclear weapons, and critical minerals, according to US officials.

Markets also remain focused on inflation concerns and slowing economic growth caused by higher oil prices, in addition to potential central bank responses, Broux added.

This week, investors are awaiting US April inflation data following Friday’s US jobs report, which showed the economy added 115,000 jobs during April, nearly double market expectations.

Those figures strengthened expectations that the Federal Reserve will keep interest rates unchanged for some time.

The Federal Reserve kept interest rates steady last month as expected, though the decision revealed the deepest internal division within the central bank in decades after three officials opposed signaling the possibility of future rate cuts.

Alex Loo, macro strategist at TD Securities in Singapore, said factors that could pressure the dollar “have become less clear following hawkish comments from some Fed officials, strong US economic data, and continued deadlock in the Middle East.”

Chinese Yuan Hits Strongest Level in More Than Three Years

In other currency markets, the Chinese yuan touched its strongest level against the US dollar in more than three years during Monday trading before the offshore yuan stabilized at 6.7928 per dollar.

Data released earlier Monday showed China’s producer prices rose more than expected in April, reaching the highest levels in 45 months amid rising global energy costs.

That followed weekend data showing Chinese export growth accelerated last month as factories rushed to meet AI-related demand.

The euro slipped 0.1% to $1.1774, while the Japanese yen weakened 0.3% to 157.11 per dollar, and the British pound fell 0.23% to $1.36.

In the UK, markets are closely monitoring the political fallout from recent local election results, which dealt heavy losses to Prime Minister Keir Starmer’s Labour Party.

Chris Turner, global head of markets at ING, said in a note: “Although Labour’s losses were not as severe as markets feared, they have not ended speculation about a potential leadership challenge or a broader shift by the government toward more left-wing policies.”

Silver prices lost more than 1.5% in the European market on Monday, pulling back from three-week highs due to active correction and profit-taking, while also coming under pressure from rising US dollar and oil prices in global markets amid stalled peace talks between the United States and Iran.

Higher oil prices are renewing inflationary pressure on Federal Reserve policymakers and reducing the likelihood of near-term US interest rate cuts, as markets await further data on developments in the world’s largest economy.

Price Overview

•  Silver prices today: Silver prices declined by around 1.6% to $79.10, from the opening level at $80.35, while recording a session high at $81.64.

•  At Friday’s settlement, silver prices rose 2.45%, marking the fourth consecutive daily gain, after recording a three-week high in the previous session at $82.13 per ounce.

•  Silver prices gained 6.65% last week, posting the first weekly gain in the past three weeks, supported by hopes for a peace agreement between the United States and Iran.

US Dollar

The dollar index rose more than 0.3% on Monday, resuming gains that paused on Friday and reflecting stronger performance of the US currency against a basket of major and secondary currencies.

The dollar’s rise comes amid renewed safe-haven demand due to fears of escalating military confrontation between the United States and Iran, especially after Tehran rejected the US peace proposal.

Global Oil Prices

Global oil prices jumped more than 5% on Monday at the start of the week, heading toward the highest levels in several weeks amid fears over continued closure of the Strait of Hormuz and disruptions to oil supplies.

There is little doubt that higher global oil prices are reviving concerns about accelerating inflation, which could push central banks worldwide toward raising interest rates in the near term, marking a sharp shift from pre-war expectations of prolonged rate cuts or stable policy rates.

Stalled US-Iran Talks

On the Truth Social platform, US President Donald Trump announced his complete rejection of the Iranian response delivered through the Pakistani mediator, saying: “I just read the response from the so-called representatives of Iran… I don’t like it at all. Completely unacceptable.”

The Iranian proposal included ending the war on all fronts, including Lebanon, lifting the US naval blockade on Iranian ports, allowing Iranian control over the Strait of Hormuz, and obtaining war reparations, in exchange for later negotiations over the nuclear issue.

Iranian President Masoud Pezeshkian struck a defiant tone, saying Iran “will not bow its head to the enemy,” and that entering negotiations does not mean surrendering to “Trump’s greed.”

Israeli Prime Minister Benjamin Netanyahu also said in a television interview that the war is still ongoing because “there is more work to finish.”

US Interest Rates

•  According to the Federal Reserve’s semiannual report released Friday, the ongoing war with Iran and its impact on oil prices and supplies topped the list of financial stability concerns.

•  According to the CME FedWatch tool: markets currently price a 95% probability that US interest rates will remain unchanged at the June meeting, while the probability of a 25 basis point rate cut stands at 5%.

•  To reassess those expectations, investors are closely monitoring further US economic data releases, in addition to comments from Federal Reserve officials.

Gold prices fell nearly 1.5% in the European market on Monday, pulling back from two-week highs under pressure from rising US dollar and oil prices in global markets, as peace talks between the United States and Iran stalled after Trump rejected Iran’s response to the US peace proposal.

Higher oil prices are renewing inflationary pressure on Federal Reserve policymakers and reducing the likelihood of near-term US interest rate cuts, as markets await further data on developments in the world’s largest economy.

Price Overview

•  Gold prices today: Gold prices declined by around 1.5% to $4,648.30, from the opening level at $4,715.03, while recording a session high at $4,715.03.

•  At Friday’s settlement, gold prices gained 0.65%, resuming gains that had paused in the previous session due to correction and profit-taking from the two-week high at $4,764.85 per ounce.

•  Gold prices rose 2.2% last week, marking the first weekly gain in the past three weeks, supported by hopes for a lasting peace agreement between the United States and Iran.

US Dollar

The dollar index rose more than 0.3% on Monday, resuming gains that paused on Friday and reflecting stronger performance of the US currency against a basket of major and secondary currencies.

As is known, a stronger US dollar makes dollar-denominated gold bullion less attractive for holders of other currencies.

The dollar’s rise comes amid renewed safe-haven demand due to fears of escalating military confrontation between the United States and Iran, especially after Tehran rejected the US peace proposal.

Stalled US-Iran Talks

On the Truth Social platform, US President Donald Trump announced his complete rejection of the Iranian response delivered through the Pakistani mediator, saying: “I just read the response from the so-called representatives of Iran… I don’t like it at all. Completely unacceptable.”

The Iranian proposal included ending the war on all fronts, including Lebanon, lifting the US naval blockade on Iranian ports, allowing Iranian control over the Strait of Hormuz, and obtaining war reparations, in exchange for later negotiations over the nuclear الملف.

Iranian President Masoud Pezeshkian struck a defiant tone, saying Iran “will not bow its head to the enemy,” and that entering negotiations does not mean surrendering to “Trump’s greed.”

Israeli Prime Minister Benjamin Netanyahu also said in a television interview that the war is still ongoing because “there is more work to finish.”

Global Oil Prices

Global oil prices jumped more than 5% on Monday at the start of the week, heading toward the highest levels in several weeks amid fears over continued closure of the Strait of Hormuz and disruptions to oil supplies.

There is little doubt that higher global oil prices are reviving concerns about accelerating inflation, which could push central banks worldwide toward raising interest rates in the near term, marking a sharp shift from pre-war expectations of prolonged rate cuts or stable policy rates.

US Interest Rates

•  According to the Federal Reserve’s semiannual report released Friday, the ongoing war with Iran and its impact on oil prices and supplies topped the list of financial stability concerns.

•  According to the CME FedWatch tool: markets currently price a 95% probability that US interest rates will remain unchanged at the June meeting, while the probability of a 25 basis point rate cut stands at 5%.

•  To reassess those expectations, investors are closely monitoring further US economic data releases, in addition to comments from Federal Reserve officials.

Gold Outlook

KCM Trade chief market analyst Tim Waterer said: “We are currently seeing hopes for a near-term peace agreement fading, while gold is being negatively affected by the renewed rise in crude oil prices.”

Waterer added: “In the short to medium term, the $4,400 to $4,800 per ounce range remains strongly in play as long as we remain stuck in this ceasefire-without-peace-agreement environment.”

SPDR Fund

Holdings of SPDR Gold Trust, the world’s largest gold-backed ETF, increased on Friday by 0.51 metric tons, marking the second consecutive daily increase and lifting total holdings to 1,033.99 metric tons.