Crude Oil Soars As U.S. Delays Responding To Iran's Peace Plan

Summary

(RTTNews) - Crude oil prices have surged on Monday, extending the gains from the two previous sessions as the U.S. administration takes time to respond to Iran's new peace proposal while the uncertainty surrounding reopening of the Strait of Hormuz holds. WTI Crude Oil for June month delivery was last seen trading up by $3.27 (or 3.10%) at $108.69 per barrel. As the U.S.-Israel versus Iran war entered day number 80 today, the Strait of Hormuz, which has been shut since the conflict started, continues to remain closed. This has halted the oil and energy trade from Arab countries to rest of the world. The U.S. administration announced a ceasefire, which is still holding (since April 8) to pursue all diplomatic avenues to end the hostilities. However, both nations have been rejecting each other's proposals, leaving the peace talks stalled. The U.S. has enforced a naval blockade (since April 13) on all ships transiting to and from Iran's ports. The U.S. Navy is still stationed near Iran. Last week, U.S. President Donald Trump stated that the ceasefire was "on life support." Expectations of mediation through China ran high last week in the sidelines of U.S. President Donald Trump's visit to China for a two-day summit. Trump acknowledged that he spoke about Iran with Chinese President Xi Jinping and added that both were in agreement that the strait should reopen as early as possible. China shares a longstanding relation with Iran and purchases nearly 90% of their oil exports. Contrary to expectations, the summit concluded with no announcement made of any possible intervention from China to bring the war to an end. While returning to the U.S., Trump observed that though he did not personally favor the ceasefire, he did it at the request of Pakistan. On Sunday, through Truth Social, Trump warned Iran that there would not be anything left of them if the nation fails to secure a peace deal with the U.S. Highlighting that the clock is ticking and time is of the essence, Trump urged Iran to come for a settlement. Spokesperson for Iran's Defense Ministry Reza Talaei-Nik stated that the Iranian military is fully prepared to confront any aggression by the U.S. or Israel. Senior adviser to Iran's military Major General Mohsen Rezaei warned the U.S. to back off from the gulf and lift the blockade on Iran, failing which the Gulf of Oman would turn into a graveyard for the U.S. Navy. As war concerns ran high, tension cooled off after a Reuters report (quoting sources from Pakistan) stated that Iran has sent a revised proposal to the U.S. through Pakistan's Interior Minister Syed Mohsin Naqvi who visited Iran last week. Carrying a 14-point presentation, the message is reportedly focused on negotiations to end the war and improve confidence-building measures by the U.S. Spokesperson for Iran's Foreign Affairs Esmaeil Baghaei affirmed that negotiations were going on through Pakistani mediation though he reiterated that Iran knows how to respond appropriately to the U.S. offensives. Citing sources close to the negotiating team, Tasnim news agency stated that the U.S. accepted lifting off Iran's oil sanctions during the negotiation period. However, CNBC quoted a U.S. official as denying the reports. The prevailing uncertainty on negotiations and the ongoing Strait of Hormuz closure pushed oil prices higher. Over the past few weeks, several global energy agencies have warned of a severe impending crude oil shortage as the Strait of Hormuz continues to remain blocked. On the monetary front, the new elect for Federal Reserve Chair Kevin Warsh is yet to swear in. The Fed has been holding the interest rates steady between 3.50% to 3.75% The U.S. dollar index was last seen trading at 99.06, down by 0.22 points (or 0.22%) today. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.