Oil prices surge after Trump rejects Iran’s seven-day truce offer

Sep 28, 2026 - 14:34

Oil prices and bond yields rose on Monday after US President Donald Trump rejected Iran’s proposal for a seven-day truce, reigniting concerns over inflation. Stock markets were mixed as investors awaited key US economic data due later this week.

Iran presented a proposal at the United Nations General Assembly last week calling for a temporary halt to hostilities and the reopening of the Strait of Hormuz, a move that could ease a severe disruption to global energy supplies and reduce soaring costs.

The strategic waterway is crucial to global energy shipments and has become a central flashpoint in the conflict between the United States and Iran. The situation has been further complicated by the Houthis’ control of Yemen’s Red Sea coast, including the Bab al-Mandab Strait, another major international shipping route.

Trump rejected Tehran’s proposal, telling reporters outside the White House, “I reject their proposal.” However, he later told Axios that he expected negotiations between Washington and Tehran to resume.

“They want to make a deal, but it is not the deal that I want to make,” Trump said, adding that the terms were similar to what Washington might have accepted a year earlier. “They overplayed their hand,” he said.

Axios, citing people familiar with the matter, reported that indirect talks between the two sides could begin as early as Monday. Iran, meanwhile, continued to insist on conditions for reopening the Strait of Hormuz, including the release of frozen Iranian assets, the removal of US sanctions on its oil exports and an end to the American naval blockade.

Oil prices, which fell more than 2% on Friday following news of Iran’s truce proposal, reversed course at the start of the new week. Brent crude climbed back above $106 a barrel, while West Texas Intermediate also gained.

The renewed increase in energy prices revived inflation concerns and put pressure on Asian stock markets. Seoul fell more than 2% after reopening following a prolonged holiday, while markets in Tokyo, Shanghai, Manila, Bangkok and Jakarta also declined. Hong Kong, Sydney, Singapore and Wellington recorded gains.

Bond yields also moved higher. Bloomberg reported that the average yield on a global bond gauge surpassed 4% last week for the first time since 2007.

The rise in oil prices has also renewed attention on the US Federal Reserve ahead of its next policy meeting at the end of October. The CME FedWatch tool showed markets pricing in more than a 65% chance of another interest-rate hike.

Investors are now awaiting the release of the Federal Reserve’s preferred inflation measure and a key US jobs report later this week, both of which could influence policymakers’ next decision.

“Middle East tensions have flared again after President Donald Trump rejected Iran’s latest proposal to reopen the Strait of Hormuz,” said Stephen Innes of Quintex Intel.

He said oil had moved higher and Asian equities weakened, while the recent improvement in global bond markets appeared temporary. However, he noted that markets continued to assign some possibility to a return to negotiations between Washington and Tehran.

Key figures at around 0330 GMT