Oil Prices Rise as US-Iran Talks Stall and Hormuz Supply Risks Persist
Oil prices rise on September 28 as Trump rejects Iran's peace proposal. Brent reaches $107.75 while Hormuz flows and Middle East oil exports recover.
Raja Awais Ali
9/28/20264 min read
Oil Prices Rise on Monday as US-Iran Talks Stall and Hormuz Supply Risks Persist
World oil prices jumped sharply on Monday September 28, 2026 after US President Donald Trump turned down an Iranian peace offer to end the conflict and open up the Strait of Hormuz, with threats to Middle East oil exports lingering. The main Brent crude future climbed $3.43, or 3.29%, to $107.75 a barrel at 0540 GMT while US WTI crude gained $2.14, or 2.32%, to $94.55 a barrel. This followed Trump's weekend rejection of Iran's proposal, although he suggested on Sunday that the US negotiators could hold more talks with Tehran this week.
Iran laid out its peace proposal to end the conflict during last week's United Nations General Assembly meeting in New York and suggested that the plan had been delivered to the US through Qatari mediators. Trump said on Saturday that he had rejected Iran's plan while in a Sunday phone interview with Axios he suggested that US negotiators could continue talks with Iran this week.
Oil traders were watching developments closely to see if further diplomatic efforts between the US and Iran could ease concerns over the Strait of Hormuz and boost energy shipments. Ahead of the vote, Brent gained about 0.4% for the week while WTI dropped 7.9%, partly due to concerns that the United States could ban diesel exports to ease record prices of the fuel. Such a move could reduce refining activity in the United States, while tightening supplies of diesel in some overseas markets most notably Europe.
Strait of Hormuz has become a key focal point for crude prices since the outbreak of the conflict. Recent flows of crude through the waterway have been picking up, however, with preliminary Kpler data showing that the volume flowing through the strait is set to hit about 7.4 million barrels per day in September. This compares to much lower volumes of crude shipped through the strait during the conflict.
Crude exports from the Middle East have also picked up during the course of September. Preliminary Kpler data showed that exports from the region hit around 12.8 million barrels per day, the highest level since the war began in February. This follows Saudi Arabia and the United Arab Emirates among other Gulf states ramping up shipments. Regional exports were still around 6 million barrels per day below the 18.8-million barrel per day peak in February, however.
Saudi Arabia, the biggest oil producer in the region, is set to ship out around 5.4 million barrels per day of crude in September, up from around 2.5 million barrels per day in August. Shipments from Saudi Arabia's Ras Tanura port rose sharply to around 3.6 million barrels per day in September from 929,000 barrels per day in August. The number was still below the roughly 6.4 million barrels per day shipped from the port in February.
According to Kpler data, 19 very large crude carriers - each with a capacity of around 2-million barrels of oil - passed out of the Strait of Hormuz during the previous week. The numbers do not take into account any tankers that may have passed through the strait with their automatic identification system transponders turned off. Prior to the outbreak of the conflict on February 28, the Strait of Hormuz usually sees around 125 large commercial vessels passing through per day and accounts for around 20% of the world's daily crude oil and liquefied natural gas supply.
The conflict has also prompted Saudi Arabia to shift some of its exports to alternative ports after its East-West oil pipeline was damaged in attacks. Some shipments have been redirected from the Red Sea port of Yanbu towards the eastern Ras Tanura port, allowing the country to continue its crude exports despite damage to some export infrastructure. The increase in exports has helped to alleviate some of the immediate supply pressures on the international oil market, although security concerns remain in the region.
Yemen is another factor adding to Middle East security concerns given the potential impact on oil infrastructure. Yemen's Saudi-led coalition said on Saturday that it had intercepted two ballistic missiles and two drones fired by the Iran-backed Houthis towards Saudi Arabia. Further attacks on infrastructure and shipping routes in the region could further disrupt oil supplies if the conflict intensifies.
Back in the United States, the price of diesel has also been a factor in the divergent performance of Brent and WTI. Record prices of diesel in the United States have added to inflation concerns while reigniting the debate over whether Washington could impose restrictions on diesel exports. Analysts quoted by Reuters suggested that such a move could impact refining activity in the United States while reducing supplies of the fuel in overseas markets such as Europe. At the same time, lower refining output in the United States could put further downward pressure on WTI prices.
Oil traders are turning their attention to the next round of talks between the US and Iran as well as the movement of tankers through the Strait of Hormuz. A successful outcome to the negotiations could add to the recent improvement in exports and tanker flows through the strait, reducing some of the supply pressures on crude prices, while renewed tensions or attacks could push prices higher.
Brent crude was trading at $107.75 a barrel and WTI at $94.55 at 0540 GMT on September 28 as Middle East exports and shipments through the Strait of Hormuz recovered from early-month disruptions. With the prospect of a potential agreement between Washington and Tehran still very much in play and further attacks on the region's energy infrastructure still a concern, the oil market remains sensitive to the developments in the region and the ability of major producers to maintain their crude exports.
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