Oil prices surge as Trump rejects Iran's peace counteroffer

Global oil prices jumped more than 4 percent Monday after President Donald Trump rejected Iran's counteroffer to a U.S. peace proposal, dashing hopes for an end to supply disruptions that have persisted for 11 weeks.

The price swing reflects how deeply Middle East supply disruptions have rattled energy markets globally, with analysts warning the current supply loss rivals the demand destruction seen at the height of the COVID-19 pandemic in 2020.

Brent crude climbed to $105.50 a barrel — a gain of more than 4 percent — while West Texas Intermediate rose 4.4 percent to $99.80 before retreating slightly in European trading. Prices stabilized at $103.95 and $97.59, respectively, by mid-morning in London. Trump triggered the move by posting on Truth Social expressing displeasure with Tehran's response to U.S. overtures, The Korea Times reported.

Iran's counteroffer demanded an end to U.S. sanctions and a naval blockade, along with guarantees against future U.S. or Israeli military strikes — terms Trump rejected as unacceptable. U.S. officials said a ceasefire remains in place despite the diplomatic breakdown.

Susannah Streeter, chief investment strategist at Wealth Club, said the failed talks will keep commodities markets under strain. "While there's some expectation that a major reignition of the war is less likely, given the U.S. claims a ceasefire is still in place, severe supply constraints of commodities are set to continue," Streeter said, according to The Korea Times. "With the crisis now into the 11th week, consumers, companies and countries are having to adapt to a world of constrained supplies."

Felipe Elink Schuurman, CEO of Sparta Commodities, drew a direct comparison to the pandemic in remarks to CNBC. "In 2020, on average, we lost 9 million barrels per day of demand versus 2019, which is pretty much the equivalent of what we are losing now in terms of supply," he said. "So, the market will have to adjust, and we will have to get to that level of demand destruction."

Schuurman told CNBC the burden will not fall evenly across nations. Wealthier countries will absorb higher prices at the pump, but poorer ones face a far grimmer outcome. "You are going to end up in a scenario where poorer countries are going to have a humanitarian crisis, Europe is going to have an economic crisis and the U.S., a political one," he said.

The standoff now stretches into its 11th week with no resolution in sight, leaving global energy markets to brace for continued disruption as U.S.-Iran negotiations remain deadlocked.