Trump Rejects Iran Peace Proposal as Oil Prices Surge

Diplomatic Deadlock Deepens

President Donald Trump rejected Iran's counterproposal to end the 10-week war in the Middle East, calling it "totally unacceptable" in a Truth Social post on Sunday . The swift dismissal came just hours after Tehran's counter-proposal to the United States' plan to end the conflict included recognition of sovereignty over the blockaded Strait of Hormuz and a demand for compensation for war damages .

Iran's foreign ministry spokesman said on Monday that Tehran's latest proposal to the United States was "reasonable and generous," adding "We are not bullies; we stand against bullies" . He added that Iran's demands included ending the war, lifting the US blockade and releasing Iran's frozen assets. He said safe passage through the Strait of Hormuz and security in the region were also part of the proposal .

The proposal Iran submitted to the US has 14 points, which include lifting the naval blockade, release of Iran's frozen assets, payment of compensation, removal of sanctions, and ending the war on all fronts, including Lebanon . According to IRIB, the proposal also rejects any framework that would weaken Iran's control over the strategic waterway .

Economic Pressure Mounts

U.S. West Texas Intermediate futures with June delivery advanced 4.96% to $100.3 per barrel on Monday, while the international benchmark Brent crude futures with July delivery rose 4.92% to $105.76 per barrel . Crude prices are up around 45%, or some $30 a barrel, since the war started, blockading a waterway that is ordinarily a conduit for around a fifth of the world's global oil and natural gas supply .

The oil disruption has increased the US average for gas prices in the US to $4.52 a gallon, according to AAA . Consumers and businesses will face higher costs "in the short run" as the war in Iran drives up the price of oil and gas, US National Economic Council Director Kevin Hassett acknowledged Sunday. But once the Strait of Hormuz is fully opened, "a gusher of oil" will be released into the market and bring prices down .

Surveys show the war is unpopular with US voters facing sharply higher petrol prices less than six months before congressional elections . The US has also found little international support, with NATO allies refusing calls to send ships to open the Strait of Hormuz without a full peace deal and an internationally mandated mission .

Nuclear Standoff Continues

The US laid out a "very clear red line" in its latest proposal, US ambassador to the United Nations Mike Waltz said earlier on Sunday. "President Trump has been clear they will never have a nuclear weapon and they cannot hold the world's economies hostage" . However, The reports did not mention the country's nuclear program, which has been one of the key issues the US has tried to address .

The Wall Street Journal reported that Iran rejected U.S. demands regarding its nuclear program and stockpile of highly enriched uranium. Instead, Tehran proposed separate negotiations and offered to dilute some of its highly enriched uranium and transfer the rest to a third country, with a provision that it be returned if Washington exits any eventual deal .

When pressed on how to handle the highly enriched uranium that remains a key goal of negotiations, Netanyahu said it can be removed from Iran physically. "I'm not going to talk about military means, but what President Trump has said to me – 'I want to go in there' – and I think it can be done physically" .

Path Forward Uncertain

The unresolved standoff hangs over Trump's upcoming summit with Chinese President Xi Jinping later this week in Beijing, where the Iran war is likely to take center stage. Washington has sought to press Beijing to lean on Tehran to reopen the strait, though China's appetite to act as a pressure mechanism remains unclear .

A Qatari LNG tanker crossed the strait on Sunday for the first time since the war began, a passage that was reportedly approved by Iran to build confidence with Qatar and Pakistan, though the symbolic opening did little to ease broader market concerns . Iran continued drone attacks on Gulf neighbors over the weekend. The UAE said it intercepted two drones coming from Iran, Qatar condemned a drone attack that struck a cargo ship in its waters, and Kuwait said its air defenses had encountered hostile drones .

The breakdown in negotiations leaves both sides facing difficult choices. Iran's Islamic Revolutionary Guard Corps posted on Sunday that "there is only one way to read this: Trump must choose between 'an impossible military operation or a bad deal with the Islamic Republic of Iran'." It also added that "the room for US decision-making has narrowed"