With Trump publicly rejecting Iran's phased de-escalation proposal, US-Iran negotiations have once again fallen into a deadlock, and the market quickly pushed up the "risk premium" in the crude oil market.

Because negotiations between the US and Iran over the Strait of Hormuz failed to achieve a breakthrough, the geopolitical risk premium in the crude oil market has been raised once again. Before the European session on Monday, Brent crude rose more than 1%, briefly approaching the $100 mark during intraday trading, with cumulative gains this month reaching about 10%. WTI crude once rose above $93.

This round of oil price rebound occurred after US President Trump publicly rejected Iran's latest proposal. Trump said last Saturday that he had rejected the agreement proposed by Iran, but said the two sides would continue contacts this week. Iran, for its part, has shown no sign of softening its conditions.

Hormuz Proposal Rejected, Gap Between Conditions Remains Wide

Previously, Iran submitted a proposal to the United States through Qatari mediators during the United Nations General Assembly in New York, hoping to promote an end to the conflict through a phased arrangement and restore normal commercial shipping through the Strait of Hormuz. According to arrangements previously announced by Iranian Foreign Minister Araghchi, if the United States accepts the conditions, a seven-day countdown would begin, after which passage through the strait would resume and regional conflict would be suspended, followed by broader negotiations on issues agreed by both sides. Iran demands that the United States stop what it calls "aggressive actions," lift the blockade on Iranian ports, release frozen Iranian assets, and adjust restrictions targeting Iranian oil. Senior Iranian officials also said that even if the United States accepts the proposal, Tehran will not make concessions on nuclear issues such as the right to uranium enrichment.

Trump said publicly last Saturday, "They put forward a proposal, but I rejected it." US Ambassador to the United Nations Mike Waltz said last Sunday that Trump is not convinced Iran is negotiating in "good faith," and that the US side believes Tehran is demanding too many sanctions and economic concessions in the early stage of negotiations. Araghchi reiterated last Sunday that restoring passage through the Strait of Hormuz remains conditional on Iran's proposed conditions being met, and said only negotiations can break the current deadlock. Iran says the relevant conditions have been fully conveyed to the US side through mediators, but Tehran has not yet received a formal response passed back through the mediators.

However, diplomatic channels have not been completely closed. Reports say indirect US-Iran negotiations could resume as early as Monday.

Actual Crude Oil Exports Are Recovering

While the negotiating deadlock is pushing oil prices higher, actual crude oil supply in the Middle East has shown a clear recovery, in contrast to the most severe stage of the conflict. Preliminary data from Kpler show that crude oil exports from major Middle Eastern producers including Saudi Arabia, the UAE, Iraq, Oman, Qatar, Kuwait and Iran are expected to rise to 12.8 million barrels per day in September, the highest level since the conflict broke out at the end of February. Even so, this scale is still about 6 million barrels per day lower than February's 18.8 million barrels per day.

Crude oil transportation through the Strait of Hormuz is also recovering. Kpler estimates that crude oil exports through the strait in September will reach about 7.4 million barrels per day. Last week alone, 19 very large crude carriers left the Strait of Hormuz, each carrying about 2 million barrels of Saudi crude. The related statistics have not yet included vessels that turned off their automatic identification systems and therefore cannot be tracked by conventional shipping data.

Saudi Arabia has become one of the main drivers of this round of export recovery. Kpler data show that the country's crude oil exports in September are expected to reach 5.4 million barrels per day, up from 2.446 million barrels per day in August; among these, exports from Ras Tanura port rose from 929,000 barrels per day in August to about 3.6 million barrels, but remain below February's level of 6.411 million barrels per day.

Before the conflict, about 125 large commercial vessels typically passed through the Strait of Hormuz each day, carrying about 20% of the world's daily crude oil and liquefied natural gas supply. The September export data indicate that actual transportation capacity has recovered significantly from earlier lows, but there is still a large gap from pre-conflict levels.