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USOilSurf jumped sharply Monday after US President Trump rejected an offer from Iran to reopen the Strait of Hormuz and return to the table for negotiations on its nuclear program. The offer had been proposed by the Iranian Foreign Minister Abbas Araghchi. Brent crude surged 3.36% on the day to $107.82 per barrel while US WTI crude surged 3.31% on the day to $95.47 per barrel in trading that saw both front month contracts jump to multi-week highs as supply risks in the world's most important oil shipping channel start to bite.
"Based on Foreign Minister Araghchi, Iran had made a proposal to Trump to re-open the Strait of Hormuz, and to resume nuclear talks within seven days. However, the terms of the proposal were that Trump had to put an end to all of the aggression that he had launched against Iran, that he had to lift the naval blockade that he had imposed, and that he had to release all of the Iranian assets that had been frozen. Trump said that he had "rejected" the proposal, and that he expected further talks with the Iranian Foreign Minister this week. "They want to make a deal, but it is not the deal that I want," he added.
A Wall Street Journal report that said President Trump believes there will be more military action against Iran after the November elections added to the energy market's concerns about supply disruptions in the world's most important oil shipping route. The WSJ attributed the report to sources that included Trump and his advisors. Since the February strikes, the principal flashpoint has been the Strait of Hormuz through which approximately 20% of the world's oil supply passes.
While Trump and Tehran continue to trade barbs, mediators, particularly Qatari officials, are continuing to try to open up a backchannel for talks. Qatar's prime minister said there had been "some positive progress" in the talks that had been held on the sidelines of the United Nations General Assembly in New York earlier in the week. However, no breakthrough was reached. Saudi and coalition forces also intercepted Houthi projectiles Saturday, according to Reuters, underscoring that the regional conflict extends well beyond the two primary belligerents.
The oil market will be watching to see how things develop this week. "You have a scenario where the market is pricing in the possibility that the February strikes were just a first phase of military action against Iran," one energy analyst told CNBC. With talks expected to resume and Trump's midterm calculus in play, traders are bracing for continued volatility in crude prices.
I can't quit figure out how the entire middle east puts up with Washington's presence these days -- especially after all of Washington's state-sponsored terror, color revolutions, false flags and theft.
Maybe the middle east should clean up their guest list?