Oil prices rise as Trump's remarks lower U.S.-Iran peace deal chances

• Trump called Iran's counterproposal 'garbage' and described the ceasefire as having 'approximately a 1% chance' of surviving, drastically reducing hopes for a diplomatic resolution
• Oil prices have surged more than 40% since the U.S. and Israeli-led war against Iran started on February 28, 2026
• Citi analysts warned that 'oil prices have been volatile and can rise further if US-Iran dealmaking remains thorny,' while Trump may seek China's help pressuring Iran during upcoming talks with President Xi

Summary: Oil Prices Rise on U.S.-Iran Tensions

Key Market Movements:

Oil prices extended gains Tuesday as geopolitical tensions escalated. Brent crude futures for July rose 0.30% to $104.51 per barrel, while WTI futures for June increased 0.31% to $98.40 per barrel. Since the U.S. and Israeli-led war against Iran began on February 28, both benchmarks have surged more than 40%.

Critical Developments:

President Donald Trump significantly dampened prospects for peace with Iran, stating the ceasefire was on "life support" with approximately a 1% chance of survival. Trump rejected Tehran's latest counterproposal to end the conflict, calling it "garbage" and describing the ceasefire's condition as "unbelievably weak."

Geopolitical Context:

The ongoing conflict has disrupted Middle Eastern stability, with a notable Iranian drone strike on March 11 igniting a fire at Salalah oil storage facilities in Oman, a strategic port on the Gulf of Oman.

Market Outlook:

Citi analysts warned that "oil prices have been volatile and can rise further if U.S.-Iran dealmaking remains thorny." Investment firm Dragonfly's Chief Intelligence Officer Henry Wilkinson indicated re-escalation remains possible but noted Trump may leverage upcoming talks with Chinese President Xi Jinping to pressure Iran into accepting U.S. terms.

Investment Implications:

The 40%+ oil price surge since late February reflects market concern over Middle Eastern supply disruptions. Continued diplomatic deadlock could drive further volatility and upward pressure on crude prices, impacting global inflation expectations and energy-dependent sectors.