Oil Prices Surge as Trump Declares Iran Ceasefire on “Life Support”
CNBC reported Tuesday that oil prices extended sharp gains after President Donald Trump dismissed Tehran’s latest peace proposal, declaring the Iran ceasefire effectively finished and raising the prospect of a prolonged Middle East war.
Brent crude futures climbed 2.43% to $106.74 a barrel in early trading. U.S. West Texas Intermediate pushed through $100, rising 2.91% to $100.92 per barrel. Both benchmarks have now gained more than 40% since the U.S. and Israeli-led military campaign against Iran began on February 28.
Trump Calls Iran Proposal “Garbage”
Trump told reporters the current ceasefire was “unbelievably weak” and dismissed Iran’s counterproposal as worthless. He painted the diplomatic situation in bleak terms, likening it to a patient with roughly a 1% chance of survival. The remarks effectively killed near-term hopes for a negotiated end to the conflict, rattling energy markets already stretched by months of supply disruption.
Citigroup warned in a research note that oil prices remain vulnerable to further moves higher if U.S.-Iran diplomacy stays deadlocked. The bank flagged continued volatility as the base case while fighting persists.
Background: A Market Already Under Strain
The conflict’s origins trace back to late February, when a U.S. and Israeli coalition launched military operations against Iran. The Strait of Hormuz, through which roughly 20% of global oil supply passes, has remained disrupted since then. That single chokepoint has been the dominant supply-side risk keeping crude prices elevated for over two months.
Also Read: What the Strait of Hormuz Closure Means for Global Energy
Geopolitical intelligence firm Dragonfly’s chief intelligence officer, Henry Wilkinson, told CNBC’s Squawk Box Asia that renewed escalation remains a live possibility. He also noted that Trump may press Chinese President Xi Jinping to lean on Tehran during U.S.-China talks expected later this week.
Aramco Flags Prolonged Market Disruption
The stakes were sharpened Monday by a warning from Amin Nasser, chief executive of Saudi Aramco, the world’s largest oil company. Speaking on the company’s first-quarter earnings call, Nasser said even an immediate reopening of the Strait of Hormuz would take months to fully rebalance the market. A delay past mid-June, he cautioned, could push normalization into 2027.
That timeline has significant implications for inflation, consumer fuel costs, and central bank policy across major economies. Energy analysts widely expect headline CPI prints in the U.S. and Europe to remain elevated well into the second half of the year if supply constraints persist.
