Middle East tensions escalate concerns resurge, Brent crude rebounds 4% after sharp decline approaching $104

According to the Tongce Financial APP, on Monday, oil prices rebounded after a sharp decline due to concerns that other countries might join the Middle East conflict and an Iranian lawmaker ruling out the possibility of negotiations with the United States. Brent crude oil prices recovered about 4% to around $104 per barrel after plunging 11% on Monday. Previously, U.S. President Trump delayed the threat to strike Iran’s energy infrastructure by five days and claimed to be in negotiations with Iran. Nonetheless, Tehran denied any negotiations, while Israel continued its attacks. WTI crude oil also rose nearly 4%.

Reports indicate that U.S. allies in the Persian Gulf are gradually joining the fight. The newspaper quoted sources as saying that among them is Saudi Crown Prince Mohammed bin Salman, who is now eager to rebuild deterrence and is about to decide on joining the attack. Local media reported that Ali Nikkzadeh, Vice Speaker of the Iranian Parliament, stated that the Strait of Hormuz will not return to its previous state, nor will Iran negotiate with Washington.

Fears that hostilities between the U.S., Israel, and Iran sweeping through the Middle East could trigger a global energy crisis and drive up inflation have caused Brent crude to rise over 40% this month. The conflict has hindered passage through the Strait of Hormuz, forcing Persian Gulf oil producers to cut millions of barrels per day of oil output. The increase in oil products such as diesel and jet fuel has even exceeded that of crude oil, putting pressure on consumers and causing concern among governments.

Daan Struyven, Co-Head of Global Commodity Research at Goldman Sachs, said in an interview, “If this shock persists longer, the extreme supply tightness focused on the Middle East and Asia will spread.” He pointed out that ultimately, demand suppression will be necessary to rebalance the supply.

Reports indicate that Iran is reviewing letters received through mediators from the U.S., citing a senior official from Iran’s Ministry of Foreign Affairs. Meanwhile, reports also say that a natural gas facility in Isfahan, central Iran, was attacked.

Canadian Royal Bank Capital Markets analyst Helima Croft and others noted in a report, “It’s still unclear how much progress has been made in secret negotiations, or whether the IRGC (Islamic Revolutionary Guard Corps) intends to reach a settlement at this stage while firmly controlling the Strait of Hormuz. Ultimately, for the physical market, what really matters may still be ships, not empty words.”

Recently, although most major transit routes through the Persian Gulf remain stalled, a small number of ships have successfully departed the Gulf.

Over the weekend, Trump threatened that unless Iran fully opens the Strait of Hormuz within 48 hours, he will bomb Iran’s energy infrastructure. Sources believe his decision to pause airstrikes was to control oil prices, which Trump also acknowledged on Monday. He said, “Once an agreement is reached, oil prices will plummet.”

The U.S. president also hinted that Washington and Tehran could jointly control the Strait of Hormuz. He said that this narrow waterway connecting the Persian Gulf and global markets “could be opened soon if feasible.”

The inconsistent messaging from U.S. leaders has exhausted investors, suppressing trading volume, as traders have to sift through nearly nonstop, sometimes contradictory headlines. Four of the six largest fluctuations in Brent crude futures history occurred after conflicts erupted.

Will Todman, Senior Fellow at the Center for Strategic and International Studies (CSIS) Middle East Program, said, “Among President Trump’s series of poor choices, negotiations might be the best outcome. However, Iran will be highly skeptical of these talks, fearing that Trump is merely delaying to send more military forces to the region.”