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President Donald Trump rejected an Iranian peace proposal relayed through Qatari mediators after it was announced at the United Nations General Assembly last week, according to a Reuters report. Iran had offered to lift its blockade of the Strait of Hormuz in exchange for the United States ending its naval blockade of Iranian ports and related sanctions relief. Trump told reporters he dismissed the terms because they were not acceptable, though he indicated in a separate interview with Axios that American negotiators would continue discussions this week.
The development sent crude prices sharply higher as concerns mounted over prolonged supply disruptions from the region. Brent crude jumped 3 percent to trade near $108 a barrel while West Texas Intermediate gained a similar amount to around $95 a barrel, Reuters figures show. The move reversed some of the declines seen late last week when initial reports of the Iranian offer had eased market worries.
US stock index futures declined in response with investors recalibrating for potential inflationary effects from sustained high energy costs. Dow E-minis fell 0.36 percent, S&P 500 E-minis dropped 0.49 percent and Nasdaq 100 E-minis lost 0.98 percent in early trading, the Reuters dispatch stated. Those concerns also pushed longer-dated Treasury yields to fresh multi-decade highs as bond prices came under pressure.
LSEG data placed the 60-day rolling correlation between oil prices and Wall Street futures at its highest level since late May, highlighting how the two markets have grown more intertwined. US-listed shares of precious metals miners ranked among the session’s biggest decliners with Gold Fields down 16 percent in premarket action while Harmony Gold and Endeavour Silver also posted losses. The miner retreat reflected broader pressure on non-yielding assets from the rise in yields.
Trump’s comments arrived days after the conclusion of a Sino-US summit that produced an agreement to cut tariffs on $60 billion worth of bilateral goods, providing some offset for equity investors. Mediators were expected to hold further separate talks with Washington and Tehran in the coming days, an official briefed on the negotiations told Reuters. Iranian officials continued to insist on the release of frozen assets and an end to the naval blockade as conditions for any deal.
The proposal had echoed elements of a memorandum of understanding the two sides signed in June, according to multiple market reports that built on the initial Reuters account. A potential US diesel export ban continued to weigh on the Brent-WTI spread which widened beyond $12 a barrel in early trade, DTN data indicated. Such a ban could force American refiners to cut processing rates and reduce domestic crude demand.
