Oil Prices Rise After Trump Rejects Iran Proposal, Markets Fear Fresh Supply Shock

International oil prices moved higher on Monday after US President Donald Trump rejected Iran’s latest proposal related to ending regional tensions, increasing fears that instability in the Middle East could intensify further. Analysts say the latest developments have once again shifted investor attention toward the Strait of Hormuz, one of the world’s most strategically important oil transit routes, where any disruption could immediately affect global energy supply.

The latest rise in crude prices came after President Trump publicly criticised Iran’s response during ongoing diplomatic exchanges. Through social media statements, Trump described Tehran’s latest proposal as “completely unacceptable,” signalling that negotiations between the two sides remain far from any meaningful breakthrough. The remarks reinforced market concerns that tensions between Washington and Tehran may continue for a prolonged period rather than moving toward de-escalation.

Iranian President Masoud Pezeshkian responded by insisting that Iran would not surrender under external pressure. In a statement posted on social platform X, he argued that dialogue and negotiations should not be interpreted as submission, reflecting Tehran’s attempt to project resistance while still keeping diplomatic channels partially open. His remarks suggest that both sides remain deeply divided not only on military and security issues but also on the broader political framework surrounding negotiations.

Energy market analysts say the immediate concern is no longer limited to diplomatic rhetoric alone. Instead, investors are increasingly worried about the possibility of disruptions around the Strait of Hormuz, a narrow shipping corridor through which a significant portion of the world’s crude oil exports pass every day. Even the perception of instability in the region tends to push oil prices upward because traders begin pricing in supply risk before any actual disruption occurs.

Lloyd Chan, an analyst at Japanese financial group MUFG, noted that Trump’s rejection of Iran’s proposal has made the diplomatic gap between the two countries even more visible. According to him, the possibility of immediate de-escalation now appears weaker, while the risk of fresh obstacles to energy transportation through Hormuz has increased. That assessment appears to have influenced investor behaviour across both commodity and equity markets.

Asian stock markets reacted cautiously to the renewed geopolitical uncertainty. Japan’s Nikkei 225 fell modestly, while Hong Kong’s Hang Seng Index also moved lower as investors reduced exposure to risk-sensitive sectors. However, South Korea’s KOSPI posted strong gains, suggesting that investors remain selective rather than uniformly pessimistic across regional markets.

The divergence in Asian markets reflects how geopolitical shocks are currently interacting with broader economic expectations. Investors are balancing fears of higher energy prices and supply disruptions against optimism surrounding technology exports, manufacturing demand and expectations of policy support from major central banks. As a result, regional markets are responding unevenly rather than moving in a single direction.

Meanwhile, separate developments in the corporate sector also influenced investor sentiment. Japanese gaming giant Nintendo saw its share price fall sharply after warning that profits could come in below market expectations. The decline added further pressure on Japanese equities already facing uncertainty from currency fluctuations, slowing global demand and geopolitical risks.

At the same time, US Treasury Secretary Scott Bessent is preparing for diplomatic visits to Japan and South Korea ahead of his planned trip to China. According to reports, he is expected to hold discussions with Japanese leaders as well as senior Chinese officials during the regional tour. His social media remark that “economic security is national security” reflects Washington’s growing strategy of linking trade, technology and geopolitical influence into a broader economic policy framework.

The renewed tensions also come at a time when trade relations between the United States and China remain fragile. Although both sides had earlier agreed to temporarily ease trade tensions, disputes over tariffs, export restrictions and strategic industries continue to create uncertainty in global markets. Investors now fear that simultaneous geopolitical and trade-related risks could place additional pressure on global growth at a time when many economies are already facing weak consumer demand and slowing industrial activity.

Oil traders, meanwhile, are likely to remain highly sensitive to any further developments involving Iran, the United States or maritime security around Hormuz. Historically, even limited military incidents in the Gulf region have triggered rapid price swings in energy markets because of the region’s central role in global crude supply chains.

For now, the market reaction suggests that investors are shifting back into a defensive mode. Rising oil prices, mixed equity performance and renewed geopolitical uncertainty indicate that global markets may remain volatile in the coming days unless diplomatic signals from Washington and Tehran begin showing signs of compromise.