Oil Settles Near $105 as Trump Rejects Iran Hormuz Plan

Brent crude settled up about 1% at around $105 a barrel on Monday, while US West Texas Intermediate added roughly 20 cents to close near $93, after prices spiked more than $4 in early trade when US President Donald Trump rejected an Iranian proposal to reopen the Strait of Hormuz. The session reversed hard from that open, with both benchmarks later touching lows near $91 and $96 as conflicting headlines on a possible nuclear deal circulated. Crude remains a headline-driven market, and the intraday range shows how quickly hopes and rejections on Iran diplomacy are being priced in both directions.

Context — Why Hormuz Diplomacy Is Moving Crude Right Now

The tone of the mediated talks is the main swing factor. A credible path to reopening Hormuz risks a sharp leg lower, while a breakdown would likely push supply risk back towards the early-session highs.

Qatari mediators were expected to hold separate talks with Iran and the US on Monday or Tuesday, focused on an amended version of a seven-day proposal Iran presented last week on the sidelines of the UN General Assembly. Iran's Foreign Minister Abbas Araqchi was set to meet mediators in New York, with the US side engaged separately.

The catalyst chain ran through Washington and Riyadh. Trump was reportedly prepared to ease sanctions and release frozen Iranian assets in exchange for progress on the nuclear file, and he told Axios on Sunday he expected more talks this week. A US official said no deal was possible without addressing enrichment.

Saudi Foreign Minister Prince Faisal bin Farhan arrived in Washington for talks with Secretary of State Marco Rubio, as hostilities escalated between Riyadh and Yemen's Iran-backed Houthis. Saudi Arabia diverted exports from Yanbu to Ras Tanura after attacks damaged its East-West pipeline.

For a market that had priced in supply risk through the February conflict, the return of cargoes matters more than the rhetoric. Middle East crude exports rebounded to nearly 13 million bpd in September, the highest since the war began in February.

Data — What the Numbers Show

Shipments through Hormuz were on track for around 7.5 million bpd this month. Before the US and Israel attacked Iran in February, roughly 20 million bpd — about a fifth of world supply — passed through the strait.

The export rebound shows the gap plainly:

Metric	September	Pre-conflict
Middle East crude exports	~13 million bpd	Not disclosed
Hormuz flows	~7.5 million bpd	~20 million bpd

UBS said flows remain below pre-conflict levels despite heavier vessel traffic, leaving the market undersupplied. That undersupply is what capped the downside on Monday.

Saudi Aramco is considering discounts of around $9 a barrel on official selling prices for crude loaded off Oman, with talks with Asian refiners on second-half October cargoes. The discount is designed to offset record freight rates.

On the product side, the Brent premium over WTI widened to its highest since May, for the third time in four sessions. Talk of a possible US diesel export ban drove that move, a sign markets expect US refiners to process less crude if diesel stays at home. The White House is considering regulatory relief for broader sales of red-dyed diesel, and the Transportation Department finalised sharply lower vehicle fuel economy standards.

Analysis — Product Tightness Is Now Steering Crude Spreads

The wider Brent-WTI spread is the cleanest signal in Monday's tape. It suggests product tightness, not just crude supply, is shaping price relationships, and that refiners face a margin squeeze if diesel policy shifts.

Goldman Sachs said Europe and especially Latin America are the key destinations for US diesel exports, and that a tightening shock would likely spread quickly worldwide. Goldman also argued a US diesel export ban would backfire on domestic gasoline prices, and separately estimated such a ban would cut US prices about 4% while lifting European costs.

Exposure sits with refiners and diesel-linked logistics. Marine and road freight operators absorb higher delivered costs, and record freight rates already feed into the Aramco Oman discount mechanism. Russian supply adds a second layer: Moscow imposed an export ban to protect domestic supply after Ukrainian attacks on refineries, and Ukrainian President Volodymyr Zelenskiy said Ukraine's military struck Russian oil facilities in the Krasnodar region on Monday.

The counter-argument is that diplomacy could unwind the risk premium fast. Reports that Iran had agreed to halt enrichment in exchange for easier sanctions sent both benchmarks to session lows before later reports said the chances of an agreement were extremely slim, with wide gaps and significant obstacles. Araqchi's stay in New York was reported not to have been extended.

Positioning reflects that tension. Traders are holding headline risk in both directions, with the market undersupplied on physical flows while paper markets price a diplomatic path.

Outlook — What to Watch Next

The Qatari-mediated talks are the first catalyst. Whether they produce any movement on the Strait of Hormuz will set the tone for the next session, and the gap between the amended proposal and the US demand on enrichment is the specific friction point.

Saudi export flows are the second. The East-West pipeline damage and the diversion from Yanbu to Ras Tanura are unresolved, with one report saying the pipeline had resumed exports. Confirmation either way matters for how much crude reaches Hormuz.

US diesel policy is the third. A decision on red-dyed diesel sales or an export ban would move the Brent-WTI spread further. Watch the spread itself: it has widened to its highest since May three times in four sessions, and a fourth move would confirm the product-tightness trade is entrenched rather than tactical.

Frequently Asked Questions

What does the Strait of Hormuz reopening mean for oil prices?

Hormuz carried roughly 20 million bpd before the February conflict, against about 7.5 million bpd this month. A credible reopening path would restore a large slice of that supply and risks a sharp leg lower in crude, because the market has been pricing supply risk since February. A breakdown in talks would likely push prices back toward the early-session highs instead.

Why did the Brent-WTI spread hit its highest since May?

Talk of a possible US diesel export ban changed what traders expect from US refiners. If diesel stays domestic, refiners process less crude, so WTI weakens relative to Brent. Goldman Sachs said Europe and Latin America are the main destinations for US diesel exports, meaning a tightening shock would spread worldwide rather than stay contained in the US.

What is the Aramco Oman discount of around $9 a barrel about?

Saudi Aramco is considering discounts on official selling prices for crude loaded off Oman, with talks with Asian refiners covering second-half October cargoes. The discount offsets record freight rates, which have pushed delivered costs higher. It is a delivered-price adjustment, not a signal about Aramco's view on flat price.

Bottom Line

Crude closed marginally higher because physical undersupply outweighed peace headlines, but the Qatari talks now control the next move.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.