Trump Calls Iran’s Peace Proposal “Totally Unacceptable” as Oil Hits $105

• Trump called Iran’s peace proposal “totally unacceptable” after Tehran demanded sovereignty
  over Hormuz and US war reparations
• Oil surged 5% to $105 as markets priced in a prolonged Strait of Hormuz closure with
  no deal in sight
• Netanyahu warned the war is “not over” as global oil inventories drain at 4.8 million
  barrels per day with no buffer left by June

The Iran war reached a critical inflection point on Sunday after Tehran submitted its formal counterproposal through Pakistani mediators and President Trump rejected it within hours. Brent crude surged more than 4% to $105.51 a barrel, with WTI climbing nearly 5% to around $100. The crude oil price reaction was immediate. Iran’s proposal demanded full sovereignty over the Strait of Hormuz, US war reparations, complete sanctions removal, and the return of frozen assets. Washington called none of it acceptable. With global oil inventories being drained at 4.8 million barrels a day and no Iran peace deal in sight, markets are running out of patience.

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Iran Demands Hormuz Sovereignty and War Reparations as Oil Surges

Iran submitted a multipage response to the US peace proposal on Sunday morning, routed through Pakistan as the designated back-channel mediator. The document, described by Iranian state media as “realistic and positive,” landed like a provocation in Washington.

Tehran’s proposal called for an immediate end to the Iran war on all fronts, full Iranian management of the Strait of Hormuz, and an end to the US blockade on Iranian ports as a precondition for reopening the waterway. It also demanded the lifting of all sanctions, the release of frozen Iranian funds, and direct US compensation for war damages. A ceasefire in Lebanon was framed as a non-negotiable red line.

On the nuclear side, Iran offered to suspend uranium enrichment, but only for a shorter period than the 20-year moratorium Washington had proposed. It rejected any dismantling of its nuclear facilities. Tehran also offered to dilute some of its highly enriched uranium and transfer the rest to a third country, on the condition that it be returned if the US exits any eventual agreement.

Trump read the document and posted on Truth Social:

“I have just read the response from Iran’s so-called ‘Representatives.’ I don’t like it — TOTALLY UNACCEPTABLE! Thank you for your attention to this matter. President DONALD J. TRUMP”

What Iran’s Proposal Actually Said About the Strait of Hormuz

The Strait of Hormuz sat at the center of Tehran’s demands. Iran’s 10-point message on the Persian Gulf described US military presence as the “main source” of instability in the region, called American bases “unable to secure themselves,” and declared foreign powers unwelcome in the Gulf. Tehran framed control of the Strait of Hormuz as essential to regional security and promised “new rules and management” to boost what it described as broader regional prosperity.

Iran also demanded that the US end its blockade of Iranian ports as a condition for opening the waterway. A Qatari LNG tanker did cross the Strait of Hormuz on Sunday, reportedly with Iranian approval, as a goodwill gesture toward Qatar and Pakistan. The symbolic passage did very little to ease broader market concerns about a lasting resolution to the Iran war.

Oil Price Today: Markets Price In Prolonged Conflict

The oil price today reflected the breakdown in talks almost instantly. Brent crude climbed to $105.82 a barrel in early Asian trading on Monday. WTI futures rose to $100.30. The crude oil price moves were driven by fears that failed negotiations could lead to renewed military escalation and a longer disruption to energy flows through the Strait of Hormuz.

Kevin Book, head of research at ClearView Energy Partners, had this to say:

“Totally unacceptable’ translates to somewhat bullish sentiment. If they go further towards kinetic engagement and talks don’t resume, prices could go a lot higher.”

Citi analysts noted in their latest oil report that crude markets had been cushioned so far by high inventories, strategic petroleum reserve releases, and weaker demand in parts of the developing world. Still, the bank maintained that risks to the crude oil price remain skewed to the upside, since Iran retains significant control over the timing and terms of any agreement to reopen the Strait of Hormuz. Citi’s base case assumed a deal by end of May, but added that the timeline could easily be pushed out or result in only a partial reopening.

Christopher Wong, currency strategist at OCBC Bank, stated:

“Oil has stayed highly sensitive to headlines, with markets caught between hopes of de-escalation and the risk that sporadic clashes keep an energy-risk premium embedded in forex exchange and rates.”

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Netanyahu Says the Iran War Is Not Over

Israeli Prime Minister Benjamin Netanyahu added to the pressure on Sunday in an interview with CBS News’ 60 Minutes. He said the Iran war was “not over” and pointed to a list of unresolved issues. Iran had neither surrendered its enriched uranium nor dismantled enrichment sites, and it continues to support regional proxies while advancing its ballistic missile program.

Netanyahu said:

“There is still nuclear material, enriched uranium that has to be taken out of Iran. There is still enrichment sites that have to be dismantled, there’s still proxies that Iran supports, there are ballistic missiles that they still want to produce… there’s work to be done.”

Asked how the US and Israel would remove the nuclear material, Netanyahu replied:

“You go in, and you take it out.”

Iranian President Masoud Pezeshkian struck a defiant tone on the same day, posting on X:

“We will never bow our heads before the enemy, and if talk of dialogue or negotiation arises, it does not mean surrender or retreat. Rather, the goal is to uphold the rights of the Iranian nation and to defend national interests with resolute strength.”

Iranian Army spokesperson Brigadier General Mohammad Akraminia also warned that Tehran had “surprising options” if adversaries made another “miscalculation,” adding that any future aggression could take the conflict into areas “the enemy has not anticipated.”

Drone Attacks Continue Alongside Stalled Diplomacy

The Iran war did not pause while diplomats exchanged documents. Over the weekend, Iran continued drone attacks on Gulf neighbors. The UAE intercepted two drones originating from Iran. Qatar condemned a strike that hit a cargo ship in its waters. Kuwait reported its air defenses encountered hostile drones entering its airspace.

Iran’s new Supreme Leader Mojtaba Khamenei, who had not appeared publicly since the war began, also reportedly issued “new and decisive directives” for military operations, according to state broadcaster, without elaborating on the specifics.

Beijing Summit Now Carries the Weight of the Iran Peace Deal

The collapse of the latest Iran peace deal attempt now hangs over Trump’s scheduled summit with Chinese President Xi Jinping in Beijing later this week. Washington has been pressing China to use its influence over Tehran to push for a Hormuz reopening, though how far Beijing is willing to go remains genuinely unclear.

Ben Emons, managing director at Fed Watch Advisors, described the most likely outcome as a “managed détente with potentially thin deliverables,” likely producing vague joint language on de-escalation without concrete commitments on the Iran war or the Strait of Hormuz. China wants the waterway open, but cannot afford to make concessions that undercut its strategic partnership with Tehran.

Beijing hosted Iranian Foreign Minister Abbas Araghchi last week, with Chinese top diplomat Wang Yi reaffirming the two countries’ “strategic partnership” while urging Tehran to pursue a diplomatic resolution and avoid further hostilities. Whether that message carries any weight now that the latest Iran peace deal has publicly collapsed is an open question.

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