Oil prices surged sharply in Asian markets on Monday after former US President Donald Trump rejected Iran’s latest proposal aimed at ending the ongoing war in the Middle East. The renewed tension immediately sent shockwaves through global energy markets, pushing benchmark crude prices above key psychological levels and raising fears of a prolonged supply crisis.

The conflict, which began on 28 February, has already disrupted one of the world’s most important energy routes — the Strait of Hormuz. With nearly one-fifth of global oil and gas shipments typically passing through this narrow waterway, any threat to its operations has enormous consequences for global trade, fuel costs, inflation, and economic growth.

Trump’s public dismissal of Tehran’s peace terms has reignited uncertainty at a time when markets were hoping for diplomatic progress. Investors, governments, and businesses are now preparing for a potentially deeper energy crisis if tensions continue.

This article explores why oil prices jumped, how the Iran conflict is affecting world markets, what role the Strait of Hormuz plays, how major energy companies are benefiting, and what could happen next.

Understanding the Latest Oil Price Surge

Oil prices rose strongly during Monday trading in Asia as traders reacted to fresh political developments.

• Brent crude, the international benchmark, climbed 4.1% to $105.50 per barrel
• West Texas Intermediate (WTI), the US benchmark, rose 4.4% to $99.80 per barrel

These gains reflect growing concerns that the conflict may continue longer than expected, reducing global oil supply while demand remains steady.

Whenever geopolitical instability affects oil-producing regions, markets often respond instantly. Prices rise not only because of actual shortages but because traders fear future disruptions.

Why Trump Rejected Iran’s Proposal

Iran reportedly sent a response to US peace proposals through Pakistan, which has been acting as an intermediary between Washington and Tehran.

According to reports, Iran demanded:

• An immediate end to hostilities
• Guarantees against future US-Israeli attacks
• Security assurances before reopening negotiations

Trump, however, strongly rejected the proposal and posted on social media:

“I have just read the response from Iran’s so-called Representatives. I don’t like it – TOTALLY UNACCEPTABLE.”

This blunt response signaled that diplomatic talks remain stalled, increasing the chances of further military escalation.

Pakistan’s Role as Mediator

Pakistan has reportedly played a quiet but important diplomatic role in attempting to reduce tensions between the United States and Iran.

As a neighboring Muslim-majority country with relationships across the region, Pakistan can communicate with both sides more easily than some Western powers.

Its mediation effort suggests that regional countries are deeply concerned about the conflict’s consequences, particularly:

• Rising fuel costs
• Trade disruptions
• Refugee risks
• Regional military instability

However, unless both Washington and Tehran soften their positions, mediation may have limited success.

Why the Strait of Hormuz Matters So Much

The Strait of Hormuz is one of the most strategically important waterways in the world. It lies between Iran and Oman and connects the Persian Gulf to global markets.

Normally, around 20% of global oil and gas shipments pass through the strait.

That means countries including:

• Saudi Arabia
• UAE
• Kuwait
• Iraq
• Qatar

depend heavily on this route to export energy.

Since the conflict intensified, Tehran has threatened to target vessels attempting passage, effectively shutting down normal operations.

This has created immediate panic because if Hormuz remains blocked:

• Global oil supplies shrink
• Shipping insurance costs rise
• Tanker routes become longer
• Fuel prices increase worldwide

Why Oil Prices React So Quickly to Conflict

Oil markets are highly sensitive to risk. Prices move not only based on physical shortages but also expectations.

When traders hear:

• War may continue
• Shipping lanes are blocked
• Diplomacy has failed
• Sanctions may increase

they often buy oil futures in anticipation of shortages.

This speculation can push prices higher within hours.

Even if no new oil fields are damaged, fear alone can create price spikes.

The Economic Impact of $100+ Oil

Oil above $100 per barrel affects nearly every economy on earth.

Higher Fuel Prices

Petrol and diesel prices often rise quickly when crude prices jump.

Consumers may face:

• More expensive commuting
• Higher transport fares
• Increased shipping charges

Inflation Pressure

Energy is a core cost for manufacturing, logistics, agriculture, and electricity.

When oil rises, many goods become more expensive.

Slower Growth

Businesses facing higher operating costs may reduce hiring or investment.

Currency Pressure

Oil-importing countries often see weaker currencies because they must spend more foreign reserves buying fuel.

Countries Most Vulnerable to Rising Oil Prices

Oil Importers

Countries heavily dependent on imported energy suffer the most.

Examples include:

• Pakistan
• India
• Japan
• South Korea
• Many European nations

Developing Economies

Poorer countries struggle because fuel subsidies become expensive and inflation hurts households faster.

Transport-Heavy Economies

Nations dependent on aviation, shipping, tourism, or logistics face rising costs.

Impact on Pakistan

Pakistan could feel serious pressure if oil remains above $100.

Rising Import Bill

Pakistan imports a large share of its fuel needs. Higher oil means more dollars needed.

Rupee Pressure

Greater import costs can weaken the Pakistani rupee.

Inflation Risks

Petrol, electricity, transport, and food prices may rise.

Fiscal Pressure

If the government subsidizes fuel, budget stress increases.

Ceasefire Failed to Calm Markets

A ceasefire announced in early April had given markets hope.

Although mostly respected, occasional exchanges of fire continued.

On 21 April, Trump extended the truce indefinitely to allow Iran more time to submit a unified peace proposal.

That had temporarily reduced fears of full escalation.

But now, with Trump rejecting Iran’s latest response, markets believe diplomacy may be collapsing again.

Netanyahu’s Position Adds More Uncertainty

Israeli Prime Minister Benjamin Netanyahu stated that the war would not end until Iran’s enriched uranium stockpiles were “taken out.”

This signals Israel may seek stronger military objectives beyond a ceasefire.

If Israeli operations intensify:

• Iranian retaliation may grow
• Regional militias may join
• Energy infrastructure could be targeted
• Oil markets may rise further

Why Energy Companies Are Profiting

While consumers suffer from higher fuel prices, major oil producers often benefit.

Higher crude prices usually mean:

• Stronger revenues
• Higher profits
• Better dividends
• Rising share prices

Aramco’s Results

Saudi energy giant Aramco reported profits jumping more than 25% in the first quarter compared with the same period last year.

Its large cross-country pipeline helped avoid Hormuz shipping disruption.

BP and Shell

BP said profits more than doubled for the first quarter, while Shell also announced stronger earnings.

This highlights how integrated global oil companies can benefit during supply shocks.

Alternative Supply Routes Become Critical

Because Hormuz is threatened, countries are relying on pipelines and alternative export routes.

Examples include:

• Saudi east-west pipelines
• UAE overland routes
• Strategic petroleum reserves
• Longer tanker routes around conflict zones

However, these alternatives often cannot fully replace Hormuz capacity.

Could Oil Rise to $120 or Higher?

Yes, if the conflict worsens.

Possible triggers include:

• Direct attacks on oil fields
• Full closure of Hormuz
• US military intervention
• Wider regional war
• Sanctions tightening

In such scenarios, prices could rise sharply above $120 or even $150 depending on duration.

Could Prices Fall Again?

Yes, if diplomacy improves.

Potential reasons for lower prices:

• New ceasefire agreement
• Safe reopening of Hormuz
• US-Iran negotiations resume
• OPEC increases supply
• Global demand weakens

Markets can reverse quickly if tensions ease.

How Investors Are Responding

Investors often shift money during geopolitical crises.

They may buy:

• Oil stocks
• Defense companies
• Gold
• US dollar assets

They may sell:

• Airline shares
• Tourism stocks
• Emerging market assets

What Consumers Can Expect

If prices stay elevated:

• Petrol may become more expensive
• Airfares may rise
• Food transport costs may increase
• Utility bills may rise in some countries

Governments may respond with subsidies or tax cuts, but these can strain budgets.

Global Inflation Risk Returns

Many countries had been trying to reduce inflation after earlier supply shocks.

A new oil spike could reverse progress.

Central banks may face a difficult choice:

• Raise interest rates to control inflation
• Or support weak economies with lower rates

This uncertainty can affect stock markets and borrowing costs.

Historical Lessons from Oil Shocks

Past oil crises show that geopolitical events can reshape economies.

Examples include:

• 1973 Arab oil embargo
• 1979 Iranian Revolution
• 1990 Gulf War
• 2022 Russia-Ukraine energy shock

Each crisis triggered inflation, recession fears, and policy shifts.

What Happens Next?

The next few weeks may depend on several developments:

Diplomacy

Will back-channel talks resume?

Military Activity

Will attacks intensify or pause?

Hormuz Shipping

Can tanker traffic safely restart?

OPEC Response

Will producers increase supply?

US Politics

Trump’s future statements may continue moving markets.

Long-Term Implications

This crisis reminds the world of one major reality:

Global energy security remains vulnerable to geopolitical conflict.

Even with renewable energy growth, oil still powers:

• Transportation
• Industry
• Aviation
• Shipping
• Petrochemicals

Until economies diversify more deeply, conflicts in oil-producing regions will continue affecting everyone.

Read More: Russia and Ukraine confirm three-day ceasefire from 9 May

FAQs

Why did oil prices rise after Trump’s statement?

Markets feared peace talks had failed, increasing the risk of prolonged war and supply disruptions.

What is the Strait of Hormuz?

It is a narrow waterway through which around 20% of global oil and gas shipments usually pass.

How does high oil affect ordinary people?

It can increase petrol prices, transport costs, food prices, and inflation.

Which countries suffer most from high oil prices?

Oil-importing nations such as Pakistan, India, Japan, and many European economies.

Could oil prices fall again soon?

Yes, if a ceasefire holds, shipping resumes, and diplomacy progresses.

Conclusion

Oil prices jumped sharply after Donald Trump dismissed Iran’s latest proposal to end the war, reigniting fears of prolonged conflict and tighter global energy supplies. With the Strait of Hormuz effectively disrupted, markets are reacting to one of the most serious geopolitical energy risks in recent years. The consequences go far beyond oil traders. Higher fuel costs can raise inflation, hurt consumers, weaken importing economies, and slow global growth. Meanwhile, major energy companies continue benefiting from soaring crude prices. What happens next depends on diplomacy, military decisions, and whether global supply routes can reopen safely. Until then, markets are likely to remain volatile, and the world will continue watching every headline from the region.