Brent Crude Surges Above $104 as Trump Rejects Iran Peace Proposal, Strait of Hormuz Remains Shut

Brent crude futures jumped more than $3 a barrel on Monday, May 11, 2026, breaking back above the $104 mark after United States President Donald Trump rejected Iran's latest peace proposal, prolonging the Strait of Hormuz crisis and keeping pressure on global energy markets.

Brent crude futures gained $3.18, or 3.14%, to $104.47 per barrel as of late Sunday trading, building on Friday's 1.23% rise. US West Texas Intermediate crude climbed $3.09, or 3.24%, to $98.51 per barrel after settling 0.64% higher in the previous session.

Trump Calls Iran's Response "Totally Unacceptable"

Expectations of a near-term resolution to the 10-week-long US-Iran conflict evaporated after President Trump rejected Iran's response to a US peace proposal on Sunday evening. "I have just read the response from Iran's so-called 'representatives'. I don't like it — TOTALLY UNACCEPTABLE!" Trump wrote on his Truth Social platform.

Iran's response, released through state television and conveyed via mediator Pakistan, focused on ending hostilities across all fronts—particularly in Lebanon—while also addressing the safety of shipping routes through the blocked Strait of Hormuz. According to Iran's semi-official Tasnim news agency, Tehran's proposal included demands for:

• An end to the war on all fronts
• Lifting of US sanctions on Iranian oil sales for a 30-day period
• An end to the US naval blockade on Iran
• Iranian management of the Strait of Hormuz contingent on certain US commitments
• Compensation for war-related damages

The US proposal had suggested ending hostilities first before moving to negotiations on more contentious issues, including Iran's nuclear programme. Trump's swift rejection signals that the gap between the two sides remains wide.

Strait of Hormuz Crisis Enters Third Month

The prolonged conflict has caused extensive damage across Iran and Lebanon, disrupted shipping through the Strait of Hormuz, and pushed global energy prices sharply higher. The critical waterway, which typically carries about 20% of global petroleum and natural gas supplies, remains largely shut. The International Energy Agency warned the conflict is removing around 14 million barrels per day from global supply.

Saudi Aramco CEO Amin Nasser said on Sunday that the world has lost about 1 billion barrels of oil supply over the past two months, adding that energy markets would take time to stabilize even if flows resume. Aramco reported a first-quarter profit jump of 25% to $32.5 billion, benefiting from elevated oil prices and increased use of its East-West Pipeline, which now operates at maximum capacity (7 million barrels per day) to bypass the strait.

Trump-Xi Summit Becomes Critical Focal Point

Market attention now shifts squarely to President Trump's visit to China this week. Trump is due to arrive in Beijing on Wednesday and is expected to discuss Iran among other issues with Chinese President Xi Jinping, according to Reuters citing US officials. Analysts say there is hope Trump can persuade Beijing to leverage its influence over Iran to push for a comprehensive ceasefire and a resolution to the ongoing disruption in the Strait of Hormuz.

"Market attention now shifts squarely to President Trump's visit to China this week. Experts say there is hope he can persuade Beijing to leverage its influence over Iran to push for a comprehensive ceasefire," noted analysts at Haitong Futures, adding that the ceasefire may only be temporary and stalled negotiations between the US and Iran could spark renewed escalation and drive oil prices even higher.

Analysts Warn of $150 Oil if Strait Remains Closed

Nuvama Institutional Equities warned that a prolonged closure of the Strait of Hormuz could disrupt nearly 20 million barrels per day of crude flows. Under such a scenario, oil prices could potentially surge to between $110 and $150 per barrel.

Haitong Futures noted that the market remains on edge: "The ceasefire may only be temporary, adding that stalled negotiations between the US and Iran could spark renewed escalation and drive oil prices even higher."

Despite a month-old ceasefire and nearly 48 hours of relative calm, hostile drones were detected over several Gulf nations on Sunday, underlining the continuing risks facing the region. The United Arab Emirates reported intercepting two drones and blamed Iran, though no group has claimed responsibility. A drone also ignited a small fire on a ship off Qatar, with no casualties reported.

Forex Market Implications: Risk-Off Sentiment Returns

The stalled peace talks triggered a fresh round of risk-off trading in forex markets. The Australian dollar (AUD/USD) fell sharply after Trump's announcement, reversing some of its recent gains to 0.7250. The US dollar gained modestly as a safe haven, though analysts note that if war breaks out again, the dollar will likely be driven more by the inflationary shock of rising energy prices than traditional haven flows.

Gold slipped 0.5% to $4,690 an ounce, drawing scant support as a safe haven or as a hedge against inflation risks, according to MarketScreener.

Asian Economies Face Growing Pressure

Indian Prime Minister Narendra Modi appealed to India's 1.4 billion citizens on Sunday to work from home, avoid travel, and stop buying gold as the Iran war continues to send energy costs soaring. Modi urged people to use public transport and carpool wherever possible, stating: "In the current situation, we must place great emphasis on saving foreign exchange."

Governments across Asia are scrambling to insulate their economies from the ongoing energy crisis, with India also asking farmers to cut down on fertilizer use to conserve foreign exchange reserves.

UK and France Plan Multinational Mission

The UK and France announced on Sunday they will host a multinational meeting of defense ministers on military plans to restore trade flows through the Strait of Hormuz. UK Defence Minister John Healey will co-chair a meeting of over 40 nations alongside French Minister Catherine Vautrin.

"We are turning diplomatic agreement into practical military plans to restore confidence for shipping through the Strait of Hormuz," Healey said. France has deployed its nuclear-powered aircraft carrier Charles de Gaulle to the region, while the UK sent destroyer HMS Dragon.

What to Watch This Week

Traders should monitor several critical developments:

• Wednesday-Friday: Trump-Xi summit in Beijing—any joint statement on Iran could move markets significantly
• Ongoing: Drone activity and skirmishes in the Gulf—any escalation could push Brent toward $110-115
• Mid-week: UK-France defense ministers' meeting on Strait of Hormuz multinational mission
• Oil levels: Brent resistance at $105-107; WTI watching $100 psychological level
• FX pairs: Watch USD/CAD (Canada oil exporter benefits from higher prices) and oil-sensitive commodity currencies

Technical Outlook: Brent Crude

Brent crude has established a trading range between $84 and $104 since the start of the conflict. Monday's move back above $104 suggests bulls are regaining control. Key technical levels:

• Immediate resistance: $105.50 (April high)
• Major resistance: $110.00 (Nuvama downside scenario base)
• Support: $101.00 (Friday close before weekend news)
• Major support: $95.00 (20-day moving average)

With the Trump-Xi summit looming and military tensions simmering in the Gulf, volatility in energy markets—and by extension, cpi" title="Understanding inflation and CPI in forex">inflation-sensitive forex pairs—is likely to remain elevated through mid-May.