Oil prices rose amid stalled efforts to resume peace talks regarding the ongoing conflict in Iran, which has rendered the Strait of Hormuz nearly impassable and extended supply disruptions affecting global markets.
Brent crude increased by as much as 3% to $108.50 per barrel, while West Texas Intermediate approached $97 before losing some gains after Axios reported that Tehran had presented a new proposal to the United States to reopen the strait. Over the weekend, U.S. President Donald Trump called off a planned trip by senior envoys to Pakistan, which is mediating the talks, while Iran stated it would not negotiate under the threat of sanctions.
Since early April, a ceasefire has largely held, but shipping blockades imposed by both the U.S. and Iran have reduced daily traffic through the Strait of Hormuz to almost none. This supply shock has severely impacted global supplies of crude oil, fuel, natural gas, and fertilizers, raising fears of an inflation crisis.
“The world is living on borrowed barrels and on borrowed time until the Strait of Hormuz reopens,” warned Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo. “Alarm bells will ring loudly if the strait doesn’t reopen during May. A global recession is guaranteed if it doesn’t reopen in time.”
According to Axios, Iran, through Pakistani intermediaries, has offered the U.S. a proposal to end the conflict and reopen the strait, postponing nuclear negotiations to a later date. Trump is expected to meet with his national security and foreign policy team on Monday to address the impasse.
On Saturday, Trump instructed envoys Jared Kushner and Steve Witkoff to forgo the trip to Pakistan, later telling the press that Iran “offered a lot, but not enough.” Iranian President Masoud Pezeshkian emphasized that Iran would not engage in “imposed negotiations under threats or blockade.”
The Iran war, now in its ninth week, has led to increased energy prices and shortages of critical products like liquefied petroleum gas in India. The International Energy Agency has stated that the conflict is resulting in the most significant supply shock in history.
The longer the Strait of Hormuz remains closed, the more consumption will need to adjust downward to align with an anticipated supply reduction of at least 10%, according to traders. A loss of over 1 billion barrels is projected, significantly exceeding the emergency reserves that governments released following the conflict.
An impact known as demand destruction, such as airlines reducing scheduled flights, is expected to become widespread.
U.S. forces reportedly intercepted a sanctioned vessel in the Arabian Sea on Saturday as part of the ongoing blockade, with U.S. Central Command stating that a Navy helicopter directed the vessel to turn back to Iran under escort. Since the blockade began, a total of 38 ships have been redirected.
Most of Iran’s crude oil exports go to China, with the country’s private refiners, known as teapots, benefiting from discounted barrels. Recently, the U.S. sanctioned Hengli Petrochemical (Dalian) Refinery Co. due to its connections to Iran, ahead of an anticipated summit between Trump and Chinese President Xi Jinping. Hengli has denied engaging in any trade with Iran.
“This situation is unstable in a unique way,” said Martijn Rats, global oil strategist at Morgan Stanley. “Each day that the current conditions persist, the oil market tightens, placing upward pressure on prices. Conversely, if a peace agreement were reached soon, oil supply could improve, mitigating some of the risk premium currently reflected in prices.”
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Published on April 27, 2026.
