Near-month November Brent crude futures rose 3%, while WTI crude gained 2.7%. Caption: On September 23, Iran's president attended the UN General Assembly. Analysts say that with US-Iran disagreements persisting, the geopolitical risk premium on crude oil will remain elevated.
Summary: Oil prices moved higher on Monday as investors assessed new obstacles in US-Iran diplomatic negotiations, while security risks to Middle East energy supplies continued to linger. Near-month November Brent crude futures rose 3% to $107.50 per barrel, while West Texas Intermediate (WTI) crude climbed 2.7% to $94.88 per barrel. Both benchmark oils fell last Friday; the prior week saw wild market swings, with diplomatic expectations between the US and Iran shifting repeatedly and Saudi Arabia suffering a string of attacks.
Media cited US officials as saying that President Trump rejected Iran's proposal for a seven-day ceasefire. Iran's proposal was conditioned on the US lifting its blockade of Iranian ports in exchange for Iran reopening the Strait of Hormuz and restarting nuclear talks. The report said Trump also told his advisers he plans to launch another large-scale bombing campaign against Iran after the November midterm elections. Iranian Foreign Minister Abbas Araghchi said on Sunday that Tehran has still not closed the door to diplomacy. In a post on X, he said he and President Masoud Pezeshkian went to New York to seek peace, and that Iran remains willing to engage in what he called "genuine diplomatic dialogue," while warning that Iran will firmly retaliate if the US resumes military strikes.
Analysts at Mitsubishi UFJ Financial Group said that although crude oil shipping in the Gulf region has recovered somewhat, disagreements over the Strait of Hormuz and continuing regional attacks will keep the geopolitical risk premium on crude oil elevated. The regional military situation remains tense. The Saudi Press Agency cited coalition spokesman Turki al-Maliki as saying that on Saturday, Saudi air defenses intercepted and destroyed a ballistic missile fired by the Houthis at the city of Khamis Mushait. In a separate official statement, the Saudi Press Agency said the Houthis also launched ballistic missiles and drones at Riyadh and Khamis Mushait. This is not the first time the Houthis have attacked Saudi cities, energy facilities and maritime shipping. The conflict has disrupted traditional crude oil transport routes, and Saudi Arabia is not only making greater use of shipping through the Strait of Hormuz but also increasingly turning to alternative export infrastructure.
Norbert Ruecker, head of economics and next-generation research at Julius Baer, said the tight-supply narrative in the crude oil market remains very strong and is overpowering all other market factors. He said oil prices are currently being driven mainly by panic sentiment and risk premiums. After the war broke out on February 28, Iran attacked shipping vessels and passage through the strait was blocked; before that, about one-fifth of global oil and gas trade had to pass through the Strait of Hormuz. As the situation spills over, European natural gas prices have also risen in tandem. The market fears that liquefied natural gas shipments through the strait may be disrupted for a long time, and with winter approaching, supply anxiety is intensifying. Europe's benchmark Dutch TTF natural gas futures rose 2.4% in early trading to 73.63 euros per megawatt-hour. Analysts at ANZ noted that maintenance on Norwegian pipeline facilities has reduced gas deliveries, while restricted LNG transit through the Strait of Hormuz has tightened the market further; at the same time, a recovery in China's LNG imports will intensify competition for global spot cargoes.