Oil edged higher as Trump rejected Iran proposal amid Qatari mediation talks

Global crude futures settled slightly higher on Monday, paring an early four-dollar surge as expectations of Qatari-mediated negotiations tempered supply concerns following US President Donald Trump’s rejection of an Iranian proposal to reopen the Strait of Hormuz.

Early bullish momentum drove crude up more than $4 a barrel after US President Donald Trump rejected an Iranian proposal to end hostilities and reopen the Strait of Hormuz. However, prices surrendered most of their gains as Qatari mediators prepared to conduct separate discussions in New York with Iranian Foreign Minister Abbas Araqchi and US envoys to review an amended seven-day framework, with Trump indicating that Washington expects further diplomatic engagement this week.

Physical supply concerns were partially cushioned as Middle East crude exports rebounded to 12.8 million barrels per day in September—the highest level since the war began in February—supported by flows through the Strait of Hormuz rising to 7.4 million bpd as Saudi Arabia redirected volumes from Yanbu to Ras Tanura. Meanwhile, WTI significantly lagged Brent as ongoing speculation over potential US diesel export restrictions pushed the transatlantic Brent–WTI premium to its highest level since May for the third time in four sessions.

Underlying valuations remained underpinned by severe global middle-distillate shortages, heightened after Ukrainian drone strikes hit Russian oil facilities in the Krasnodar region alongside persistent Russian and Chinese export curbs. Although the White House weighed emergency regulatory relief to permit broader sales of red-dyed diesel to counter price spikes, chronic fuel deficits continue to distort global refinery runs, maintaining an elevated feedstock cost-push floor across downstream petrochemical cracking operations.