President Trump rejected Iran’s latest peace proposal on Sunday, May 10, leading to a deadlock in negotiations between the two countries. As a result, the crucial shipping lane, the Strait of Hormuz, continues to face blockades.
This development had a significant impact on the international oil market on Monday, May 11, with prices surging by over 3%. Brent crude oil surpassed $104 per barrel. Global markets saw an increase in risk aversion and a strengthening of the US dollar. Despite energy pressures and geopolitical risks, markets in the Asia-Pacific region generally showed an upward trend.
According to Iranian state media, Tehran’s proposal to the United States included a comprehensive ceasefire, lifting of sanctions, compensation payment, and recognition of Iran’s control over the Strait of Hormuz. Trump promptly rejected the proposal on social media, stating that it was “TOTALLY UNACCEPTABLE!”
Meanwhile, Israeli Prime Minister Benjamin Netanyahu emphasized that the war “is not over yet” and reiterated his stance on curtailing Iran’s nuclear ambitions.
The energy market expressed unease due to the stalled negotiations. Brent crude oil futures rose by $3.18 at one point, reaching $104.47 per barrel, while West Texas Intermediate (WTI) also increased by 3.24% to $98.51 per barrel.
Saudi Aramco CEO Amin Nasser warned that the global oil production had dropped by approximately 1 billion barrels over the past two months. Even if the shipping lanes reopen, market stability will take time to restore.
Data from the shipping information company Kpler showed that two oil tankers loaded with crude oil sailed out of the Strait of Hormuz last week after turning off their trackers to avoid potential attacks from Iran, highlighting the increasing trend to maintain Middle East oil exports.
Despite geopolitical tensions, some Asia-Pacific markets showed strong performance. The South Korean KOSPI index surged by nearly 5% at the opening on Monday, reaching 7,863.61 points, setting a new historical high. The Nikkei 225 index also rose by 0.9% to 63,278.9 points, following the upward trend on Wall Street from the previous week. The Taiwan Weighted Index also increased by approximately 0.2% to 41,677.5 points.
In comparison, the US stock futures collectively softened, with the S&P 500 index futures dropping by 0.3% and the Nasdaq futures falling by 0.2%. Supported by optimistic corporate earnings and stable job reports, the US stock market hit historical highs last week.
Bruce Kasman, the global head of economic research at JPMorgan, stated, “The Middle East conflict is now entering its 11th week. While energy prices are soaring, they are still within levels that pose economic resistance rather than ending economic expansion.”
Kasman further cautioned, “As the time of the Strait of Hormuz closure extends by each week, the risk of sharp price fluctuations increases; our commodity team expects operational pressures to begin showing in June.”
In the commodity market, gold fell by 0.5% to $4,690 per ounce. Despite the current tense situation, gold, as a traditional safe-haven asset and hedge against inflation risk, received weak support.
Global attention has now shifted to the upcoming “Trump-Xi Summit,” scheduled for Wednesday. Trump is expected to meet face-to-face with Chinese leader Xi Jinping in Beijing.
Market analyst Tony Sycamore noted, “The outside world is hoping that Trump can persuade Beijing to leverage its influence to promote a comprehensive ceasefire and resolve the turbulence in the Strait of Hormuz.”
Apart from the Iran issue, trade, artificial intelligence, critical mineral agreements, and the Taiwan matter are also expected to be included on the agenda for bilateral negotiations.