The market reaction renewed concerns about fuel prices and inflation, although both Washington and Tehran say further negotiations remain possible.
Oil prices climbed about 3% to around $108 a barrel Monday after President Trump said he had rejected an Iranian proposal intended to end the fighting and reopen the Strait of Hormuz.
The proposal was presented through Qatari mediators during the United Nations General Assembly. U.S. Ambassador to the United Nations Mike Waltz said Iran had sought the immediate lifting of sanctions and release of frozen assets before further negotiations.
“They were asking for everything up front with a promise that they would then talk,” Waltz told CNN. He said President Trump was not confident Iran was negotiating in good faith.
Iranian Foreign Minister Abbas Araqchi said Tehran still believes the conflict can be resolved through diplomacy. He also said mediators had not formally delivered a definitive American rejection to Iran.
President Trump told Axios he expects U.S. negotiators to participate in additional talks this week.
The price increase also weighed on U.S. stock futures and pushed longer-term Treasury yields higher as investors considered the potential effects of sustained energy costs on inflation, consumer spending and Federal Reserve policy.
The Strait of Hormuz remains a central issue because attacks and restrictions in the waterway have disrupted a major route for global oil and gas shipments. THRIVE! previously reported on the phased proposal to reopen the waterway.
