Oil prices surged after Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz within seven days, sending Brent crude above $107 a barrel.
Brent, the international benchmark, rose by more than 3 per cent during Asian trading on Monday and approached $108 a barrel. After easing later in the day, November futures stood at $107.35 shortly before 8am GMT.
The market movement followed Mr Trump’s statement on Saturday that Tehran’s latest plan to end the war involving the United States and Israel was unacceptable.
Iran presented the proposal at the United Nations General Assembly on Friday. It called for the US to release frozen Iranian funds, lift sanctions and end its naval blockade of Iranian ports in return for the reopening of the strait and a return to negotiations over Iran’s nuclear programme within a week.
Strait of Hormuz traffic remains sharply reduced
The waterway connects the Gulf with the Gulf of Oman and the Arabian Sea. Before the US and Israel launched strikes on Iran in late February, about one-fifth of global oil supplies passed through the strait.
Commercial shipping has fallen sharply since the war began, amid attacks on vessels in the Gulf. Most of those attacks have been blamed on Iran or groups allied with Tehran.
There were 132 vessel transits through the strait between September 21 and 27, according to maritime intelligence platform MarineTraffic. That was up from 116 the previous week, but well below the roughly 130 crossings recorded each day before the war.
Asian markets also had a mixed session. Japan’s Nikkei 225 fell 0.73 per cent and South Korea’s Kospi dropped 2.70 per cent, while Hong Kong’s Hang Seng rose 0.54 per cent and Australia’s S&P/ASX 200 edged up 0.17 per cent.
The moves came after Wall Street’s benchmark S&P 500 ended the previous week 0.5 per cent higher.
