Crude oil futures jumped more than 4 per cent after US President Donald Trump rejected Iran’s response to his proposal to end the war in West Asia.
At 9.59 am on Monday, July Brent oil futures were at $105.71, up by 4.36 per cent, and June crude oil futures on WTI (West Texas Intermediate) were at $100.10, up by 4.90 per cent. May crude oil futures were trading at ₹9513 on Multi Commodity Exchange (MCX) during the initial hour of trading on Monday against the previous close of ₹9024, up by 4.98 per cent, and June futures were trading at ₹9189 against the previous close of ₹8734, up by 5.21 per cent.
In a post on the social media platform Truth Social, Trump said: “I have just read the response from Iran’s so-called “Representatives.” I don’t like it — TOTALLY UNACCEPTABLE!”
Some reports said that Iran’s response to Trump’s proposal included the lifting of sanctions, an end to the US naval blockade in the Strait of Hormuz, and recognition to continue some nuclear activity in Iran.
A report in the Wall Street Journal said Iran proposed diluting some of its highly enriched uranium and transferring the remainder to a third country.
In their Commodities Feed for Monday, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said the oil market remains heavily headline-driven, with prices surging after Trump rejected Iran’s latest peace plan proposal. One would expect the market to become increasingly fatigued by the deluge of headlines and the back-and-forth. However, oil prices remain highly sensitive to noise around Iran, highlighting the significance of the ongoing supply disruptions in the Persian Gulf.
While optimism for an imminent deal is fading, there remains a glimmer of hope that talks between Trump and Chinese President Xi later this week could yield positive results on Iran. The hope is that China can use its influence over Iran to push it closer towards a peace deal. Clearly, this is easier said than done, they said.
The latest trade data from China for April highlights the impact of the Iran war on the country’s energy imports. They said that China’s crude oil imports in April fell 20 per cent year-on-year to 9.4 million barrels a day. This is the lowest level since July 2022, when the country was under a significant Covid-related lockdown. Meanwhile, natural gas imports in the month also fell 13 per cent year-on-year. These imports include both pipeline gas and LNG, they said.
May natural gas futures were trading at ₹267.20 on MCX during the initial hour of trading on Monday against the previous close of ₹261, up by 2.38 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), May dhaniya contracts were trading at ₹12458 in the initial hour of trading on Monday against the previous close of ₹12346, up by 0.91 per cent.
May jeera futures were trading at ₹19545 on NCDEX in the initial hour of trading on Monday against the previous close of ₹19895, down by 1.76 per cent.