Oil prices moved higher Monday after U.S. President Donald Trump rejected Iran's latest proposal aimed at resolving the conflict and reopening the Strait of Hormuz, keeping geopolitical and supply risks elevated across the Middle East.
By Carolina Curiel
Published September 28, 2026
MONTREAL (Oil Monster): Oil prices rose Monday as traders assessed the stalled U.S.-Iran diplomatic effort alongside continuing security risks around the Strait of Hormuz and a recovery in Middle East crude exports.
Brent crude futures gained $1.32, or 1.27%, to $105.64 per barrel by 0036 GMT.
U.S. West Texas Intermediate crude rose 70 cents, or 0.76%, to $93.11 per barrel.
Iran presented a proposal during last week's United Nations General Assembly meetings in New York through Qatari mediators involved in indirect talks between Tehran and Washington.
President Donald Trump said Saturday that he had rejected the proposal.
However, Trump told Axios on Sunday that he expects U.S. negotiators to hold additional talks with Iran this week, indicating that diplomatic contacts have not ended.
The Iranian proposal called for reopening the Strait of Hormuz and resuming nuclear negotiations under a broader package of conditions that included changes to U.S. sanctions and the naval blockade, according to Axios.
Qatari mediators have continued discussions with both sides in an effort to narrow the remaining differences.
The Strait of Hormuz remains one of the principal variables influencing global crude prices because of its importance to exports from major Gulf producers.
Although oil shipments through the waterway have increased from the severely disrupted levels seen earlier in the conflict, traffic remains below pre-war volumes.
ANZ analysts said geopolitical risks remained elevated as attacks involving Iran and Yemen's Houthis continued to leave regional energy flows vulnerable.
Yemen's Saudi-led coalition said Saturday that its air defenses intercepted two ballistic missiles and two drones launched by the Houthis toward Saudi Arabia.
The coalition said the missiles were headed toward Khamis Mushait while the drones were directed toward Riyadh.
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At the same time, improving physical crude flows are providing some counterweight to geopolitical concerns.
Crude exports from major Middle East producers are expected to average approximately 12.8 million barrels per day in September, according to preliminary Kpler data.
That would be the highest monthly level since the conflict with Iran began in February.
The regional total covers Saudi Arabia, the United Arab Emirates, Iraq, Oman, Qatar, Kuwait and Iran.
Despite the recovery, exports remain about 6 million bpd below the approximately 18.8 million bpd recorded in February.
Crude shipments through the Strait of Hormuz are expected to reach approximately 7.4 million bpd in September, according to Kpler.
The recovery has been supported in part by increased Saudi and UAE exports.
Saudi crude exports are on track to reach approximately 5.4 million bpd this month, compared with 2.446 million bpd in August.
Shipments from Saudi Arabia's Ras Tanura terminal have risen particularly sharply, reaching approximately 3.6 million bpd in September compared with 929,000 bpd in August.
The increase followed disruptions to Saudi Arabia's East-West Pipeline that forced the kingdom to redirect some crude away from the Red Sea export route through Yanbu and toward Gulf terminals.
Saudi Arabia restarted its East-West crude pipeline last week after attacks damaged pumping infrastructure and temporarily disrupted flows toward the Red Sea.
The system provides Saudi Arabia with an important alternative to the Strait of Hormuz by moving crude from eastern production areas across the country to the port of Yanbu.
Saudi Aramco has been working to restore pipeline flows while simultaneously increasing exports from Ras Tanura.
The oil market is currently balancing two competing forces: continued geopolitical risk is supporting prices, while recovering Gulf export volumes are easing some immediate supply pressure. Hormuz flows have improved substantially, but they have not returned to pre-conflict levels.
Oil traders are also watching the debate over whether the United States could restrict diesel exports in response to record domestic fuel prices.
U.S. diesel prices have climbed to record levels amid tight global supply, disruption to Middle East energy infrastructure and reduced availability from other major exporting regions.
Trump said last week that he supported considering restrictions on U.S. diesel exports as a way to address domestic prices.
No diesel export ban is currently in effect.
Market analysts have warned that restricting U.S. exports could tighten diesel supplies in overseas markets, particularly Europe, while potentially changing refinery economics inside the United States.
The Monday rebound followed a divergent weekly performance between the two major crude benchmarks.
Brent gained approximately 0.4% last week, while WTI fell 7.9%.
Concerns surrounding the potential impact of diesel-export restrictions on U.S. refinery activity contributed to pressure on the American benchmark.
ANZ analysts said refined products remain a key pressure point for the energy market, with high U.S. diesel prices adding to inflation concerns and increasing debate over government intervention.
The near-term direction of crude prices is likely to remain sensitive to both developments in U.S.-Iran negotiations and the volume of oil able to move through Gulf export routes.
Further diplomatic talks are expected this week, while preliminary shipping data indicates that producers are continuing to restore crude flows despite persistent security risks.
The combination leaves the market balancing an elevated geopolitical risk premium against improving physical supply from the Middle East.
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Courtesy: www.reuters.com
