HG MARKETS: 

Oil prices rose more than 2% on Monday as uncertainty over the reopening of the Strait of Hormuz continued to weigh on global supply expectations. Iran said it would not soften its conditions for reopening the key shipping route after U.S. President Donald Trump rejected Tehran’s proposal.

November Brent crude futures climbed 2.7% to $107.08 per barrel, while WTI crude futures gained 2.4% to $94.66 per barrel. Brent was also up around 18% for the month, highlighting the sharp impact of ongoing Middle East supply concerns.

Iran’s proposal calls for the Strait of Hormuz to reopen within seven days while wider negotiations continue. Tehran has linked the reopening to conditions including the lifting of the U.S. naval blockade, reduced military pressure, removal of sanctions on Iranian oil sales and a ceasefire.

Despite Trump’s rejection of the proposal, he has indicated that negotiations with Iran could resume this week. Qatar has also continued diplomatic efforts between the two sides in an attempt to revive talks and ease tensions surrounding the crucial oil transit route.

The Strait of Hormuz remains a major concern for energy markets, as roughly one-fifth of global oil and liquefied natural gas supplies passed through the waterway before the conflict began. A significant reduction in shipping activity has therefore raised concerns about potential disruptions to global energy supplies.

Supply risks have also increased as Iran-backed Houthi forces in Yemen stepped up attacks on Saudi Arabia and commercial shipping in the Red Sea. Saudi Arabia reported intercepting ballistic missiles and drones launched by the Houthis, adding to concerns over the security of regional energy routes.

The disruption has forced Gulf oil producers to explore alternative routes for transporting crude. However, there were indications that some oil was still moving through the Strait at higher volumes, with Trump saying that more than 20 million barrels had transited during the weekend.

Markets are also closely monitoring refined-product supplies as disruptions to Middle Eastern and Russian oil and product exports continue to tighten fuel markets. Diesel prices in both Europe and the U.S. have reached record levels, keeping the outlook for global energy prices highly sensitive to developments around the Strait of Hormuz.