Oil prices jumped more than 4% on Monday after President Trump branded Iran’s response to a U.S. diplomatic proposal “unacceptable,” dashing hopes of a quick resolution to the two-month crisis choking the Strait of Hormuz.
Brent crude futures, the international benchmark, climbed $4.04, or nearly 4%, to $105.33 a barrel in early trading, while U.S. West Texas Intermediate jumped $4.43, or 4.64%, to $99.85 a barrel.
The moves mark a dramatic reversal from last week, when both contracts shed approximately 6% on optimism that a diplomatic resolution to the Strait of Hormuz crisis was within reach.
That optimism has now evaporated.
The wild swings in crude prices over recent days reflect the extraordinary degree to which energy markets have become enslaved to the rhythm of diplomatic communiqués and political posturing between Washington and Tehran.
“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,” said Priyanka Sachdeva, senior market analyst at Phillip Nova, a characterization that few traders would dispute.
Since hostilities disrupted traffic through the Strait of Hormuz ten weeks ago, the waterway that channels roughly 20% of the world’s seaborne oil has remained, in the words of shipping analysts, “largely closed.” The consequences for global supply have been severe and, experts warn, enduring.
Amin Nasser, chief executive of Saudi Aramco—the world’s largest oil producer—offered a sobering assessment on Sunday, estimating that the world has lost approximately one billion barrels of oil over the past two months alone.
Crucially, he cautioned that even if flows through the Strait were to resume immediately, energy markets would take considerable time to stabilize. That warning alone is sufficient to keep a floor under prices.
The human and logistical reality of the crisis is perhaps most starkly illustrated by a troubling trend documented by shipping intelligence firm Kpler. According to its tracking data, at least three tankers carrying crude oil exited the Strait of Hormuz last week with their automatic identification system transponders switched off, effectively going “dark” to avoid detection and potential attack by Iranian forces.
The practice, while not unprecedented in conflict zones, is becoming increasingly routine and signals just how fraught the passage has become for the global energy supply chain. Insurance premiums for vessels attempting the route have soared, and many operators are routing cargoes on far longer and costlier alternative paths around the Cape of Good Hope.
With direct U.S.-Iran diplomacy seemingly at an impasse, attention is now pivoting sharply toward an unlikely venue for a potential breakthrough: the Chinese capital.
President Trump is scheduled to arrive in Beijing on Wednesday for meetings with Chinese President Xi Jinping, talks that U.S. officials confirm will include a discussion of the Iran crisis.
The visit carries enormous weight for energy markets, given China’s status as both the world’s largest oil importer and one of Tehran’s most consequential diplomatic and economic partners.
“Market attention now shifts squarely to President Trump’s visit to China this week,” wrote Tony Sycamore, market analyst at IG. “There is hope he can persuade Beijing to leverage its influence over Iran to push for a comprehensive ceasefire and a resolution to the ongoing disruption in the Strait of Hormuz.”
Whether Xi is willing or able to apply meaningful pressure on Tehran remains deeply uncertain. China has historically been reluctant to be seen as doing Washington’s bidding in its regional disputes, and Beijing’s own energy security interests are directly threatened by the crisis, giving it complex and not always aligned incentives.
The urgency of the situation for Beijing was underscored by official Chinese trade data released over the weekend, which showed that China’s crude oil imports fell to their lowest level in nearly four years in April, a direct consequence of the supply disruption rippling through global markets.
Even the most cautiously optimistic analysts are warning that a resolution to the immediate crisis will not translate into a swift return to pre-conflict price levels. The damage to supply chains, inventories, and market confidence runs deep.
In a note published Monday, analysts at ANZ Bank laid out a sobering medium-term outlook. They expect Brent crude to remain above $90 per barrel through 2026, easing only gradually to a range of $80 to $85 per barrel into 2027 as demand growth resumes and depleted stockpiles are slowly rebuilt.
“Even if the acute oil shock fades by late 2026, the ongoing risk of renewed disruption in the Strait of Hormuz, depleted inventories, and weaker policy coordination is expected to keep a geopolitical risk premium embedded in prices,” the ANZ team wrote an assessment that encapsulates the broader market consensus.
The coming days will be pivotal. If Trump’s Beijing summit yields a tangible commitment from China to press Iran toward a ceasefire, markets could see another sharp leg lower in prices.
If the talks disappoint or if Tehran rejects any Chinese-mediated overture, the world may be staring down the barrel of oil prices that test and ultimately breach the psychologically significant $110 threshold.
For consumers already grappling with elevated energy costs, for airlines and shipping companies whose margins have been eviscerated, and for emerging market economies particularly vulnerable to dollar-denominated oil price shocks, including across Africa and Asia, the stakes of the next 72 hours could hardly be higher.
WHAT YOU SHOULD KNOW
Global oil markets remain in turmoil as the U.S. -Iran standoff shows no sign of easing, with Brent crude surging past $105 a barrel after President Trump rejected Iran’s diplomatic response.
At the heart of the crisis is the Strait of Hormuz, still largely shut after ten weeks, a chokepoint so vital that its closure has already wiped one billion barrels from global supply.
With direct diplomacy stalled, the world’s best hope now rests on Trump’s upcoming Beijing summit and whether China can leverage its unique influence over Tehran to broker a ceasefire.
