Trump’s ‘No’ to Iran Peace Offer Lifts Oil | Today’s news
Oil prices rose more than 4% on Monday after US President Donald Trump rejected Iran’s offer to reopen the Strait of Hormuz if the US halts military strikes.
Around 6:30 p.m., the November Brent crude contract was trading at $106.50 a barrel on the Intercontinental Exchange, up 2.09% from its previous close. It reached a high of $108.7 per barrel during the day. A sharp rise in crude oil sparked panic in global markets, with stocks in Japan, South Korea and China falling. The benchmark Nifty fell 1.6%, while Japan’s Nikkei, Korea’s Kospi and China’s Shanghai Composite fell 0.73%, 2.70% and 1.67%, respectively.
Iranian Foreign Minister Abbas Araghchi on Friday offered to reopen the strait, traditionally a key route carrying 20% of the world’s oil and gas supplies, and resume nuclear talks with the US within seven days if the Trump administration agrees to Iran’s terms. A day later, Trump rejected Iran’s proposal for a seven-day plan to end the war, reopen the Strait of Hormuz and resume nuclear talks.
A Wall Street Journal report on Saturday said President Trump rejected Iran’s conditional offer and told advisers he expected U.S. strikes on the country to resume after November’s midterm elections. “They made a proposal, but I turned it down,” Trump said.
Higher oil prices are putting pressure on India
Higher oil prices have hurt oil marketing companies (OMCs) as retail prices of petrol and diesel have stagnated since May.
In a recent report, rating agency Icra estimated the marketing margins of oil marketing companies (OMCs) to be negative in September ₹8 per liter for petrol and negative ₹9 liters of diesel and insufficient gas recovery when cooking around ₹300 per cylinder. For OMCs, the marketing margin is the difference between their cost of acquiring the fuel and the retail selling price charged to consumers.
The latest volatility in the oil market was triggered by the escalation of the US-Iran conflict around September 8. The rise in oil prices has a major impact on the Indian economy as the country imports 90% of its oil needs. An increase of $1 per barrel per year can lead to an increase of approx ₹18,000 crore in the country’s annual import bill, which is usually more than $120 billion.
In the first five months of FY27, India imported crude oil worth USD 74.85 billion, surpassing 60% of last fiscal’s total imports of USD 123.38 billion.
In August, wholesale price inflation rose to 9.92% from 9.78% in July, as a flare-up in West Asia boosted energy prices and made food more expensive.
