Crude oil surged roughly 4% after President Trump dismissed Iran’s counterproposal to end hostilities, ratcheting up a standoff over the world’s most important oil chokepoint. Brent June futures climbed to $110.42 per barrel, touching a session high of $111.68, while West Texas Intermediate punched through to $113.07 per barrel during trading.

What happened, and why it matters right now

Iran responded to US proposals with a 10-clause counterproposal that included two non-starters for the Trump administration: a permanent cessation of hostilities and relief from sanctions. Trump rejected it outright.

The president then set a 20:00 ET Tuesday deadline for Iran to reopen the Strait of Hormuz, adding that Iran “could be taken out” imminently.

The Strait of Hormuz is responsible for roughly 20% of global oil supply, with approximately 21 million barrels of oil transported through it each day. Iran’s position is that it won’t reopen the strait or agree to rapid negotiations without permanent peace guarantees and the lifting of economic sanctions.

The diplomatic breakdown in context

The 10-clause Iranian response signals that Tehran views this as a moment to extract maximum concessions, not a moment to capitulate. Demanding permanent peace and sanctions relief before even beginning rapid negotiations is, diplomatically speaking, asking the other side to pay the full bill before looking at the menu.

What this means for investors

Higher crude prices feed directly into energy sector revenues, transportation costs, and ultimately consumer prices. Experts predict any closure of the strait could lead to oil prices soaring by 20-50%, further stressing global energy markets.