Oil Prices Jump After Trump Rejects Iran’s Truce Offer Over Strait of Hormuz

TLDR

• Trump rejected Iran’s offer of a seven-day truce tied to reopening the Strait of Hormuz.
• Brent crude jumped nearly 3% to above $107 a barrel, up 18% for the month.
• Iran says it will not soften its conditions, which include lifting sanctions and ending the US naval blockade.
• Bond yields rose, with a world bond gauge topping 4% for the first time since 2007.
• Traders now watch the Fed’s late October meeting, with odds rising for another rate hike.

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Oil prices rose sharply on Monday after President Donald Trump turned down a truce offer from Iran. The offer would have reopened the Strait of Hormuz within seven days.

Trump told reporters at the White House, “I reject their proposal.” He said the deal on the table wasn’t good enough for the United States.

What Iran Wanted in Return

Iran’s plan called for a pause in fighting. In exchange, the country wanted the US to lift its naval blockade, ease military pressure, and remove sanctions on Iranian oil sales.

Despite the rejection, Iran said it is still committed to those same conditions. The country has not changed its position.

BREAKING: President Trump has rejected Iran’s proposal for a 7-day ceasefire and has told aides he expects to begin bombing Iran after the November midterms, per WSJ.

Iran’s proposal would have reopened the Strait of Hormuz and resumed nuclear talks in return for the US lifting…

— The Kobeissi Letter (@KobeissiLetter) September 26, 2026

Trump told Axios he still expects talks to resume soon. “They want to make a deal, but it is not the deal that I want to make,” he said in an interview published Sunday.

Qatar has been acting as a go-between for the two sides. Indirect talks between Washington and Tehran could happen as early as Monday, according to Axios.

How Markets Reacted

Brent crude futures rose 2.8% to $107.27 per barrel by Monday morning. West Texas Intermediate crude gained close to 2%, reaching $94.13 per barrel.

For the month, Brent is up 18%. Prices had briefly dropped more than 2% on Friday after news of the truce offer first surfaced.

The Strait of Hormuz normally carries about a fifth of the world’s oil and gas supply. Shipping through the strait has dropped a lot since the conflict began.

Adding to the pressure, Houthi forces backed by Iran have stepped up attacks in Yemen. Saudi Arabia said it intercepted two ballistic missiles and two drones over the weekend.

Diesel prices in Europe and the US have hit record highs. Tighter fuel supplies from the Middle East and Russia are driving the increase.

Not all the news was negative for supply. Trump said more than 20 million barrels of oil moved through the strait over the weekend.

Stock markets around the world had a mixed reaction. Seoul fell 2.7% as it reopened after a break, and markets in Tokyo, Shanghai, and Mumbai also dropped.

Hong Kong, Sydney, and Singapore posted gains. London, Paris, and Frankfurt opened higher as well.

Bond yields climbed too. A global bond yield gauge passed 4% last week for the first time since 2007, according to Bloomberg.

Higher oil prices raise concerns about inflation. That puts more attention on the Federal Reserve ahead of its policy meeting at the end of October.

CME’s FedWatch tool shows more than a 65% chance of a second straight interest rate hike. Investors are also waiting on the Fed’s preferred inflation gauge and a jobs report due this week.

Analyst Stephen Innes of Quintex Intel said tensions have flared again after the rejection. He said oil prices have pushed higher and Asian stocks have softened as a result.

Innes added that markets still expect both sides to eventually return to the table. He said they may keep arguing publicly before that happens.

For now, Iran has not backed away from its demands. Trump has said talks could restart this week, but no new meeting has been confirmed.