Oil surges above $100 as Trump-Iran ceasefire teeters, global markets tremble

Global oil prices climbed sharply on Tuesday while major stock markets retreated after United States President Donald Trump declared that the fragile ceasefire between Washington and Iran was on “life support,” raising fears of renewed military confrontation in the Middle East.

Brent crude, the international benchmark for oil prices, rose by about 2.5 per cent to trade above $106 per barrel, while the US benchmark, West Texas Intermediate (WTI), climbed past the $100 mark.

The fresh rally in oil prices came after Trump rejected Iran’s latest peace proposal, describing it as “a piece of garbage” and “totally unacceptable.”

He warned that the ceasefire agreement was now at its “weakest point,” sparking fears that the 10-week conflict could escalate again.

The latest tensions are centred around the Strait of Hormuz, one of the world’s most strategic oil shipping routes through which nearly 20 per cent of global oil and liquefied natural gas supplies pass daily.

Iran’s counterproposal reportedly demanded sanctions relief, compensation for war damages, restoration of Iranian oil exports, and recognition of its sovereignty over the Strait of Hormuz. Tehran has also insisted that the United States end its naval blockade in the region before any final agreement can be reached.

The current oil shock traces back to late February 2026 when the United States and Israel launched coordinated airstrikes on Iranian military facilities, triggering a wider regional conflict. Iran responded by effectively shutting down the Strait of Hormuz, warning foreign vessels against passing through the waterway.

The closure immediately disrupted global energy supplies and sent oil prices soaring. Analysts described the situation as the biggest disruption to global oil markets since the 1970s energy crisis.

Although a temporary ceasefire was announced in April, tensions never fully eased. Shipping through the strait remained severely restricted, with many oil tankers stranded or forced to reroute.

Saudi Aramco, the world’s largest oil exporter, warned that if disruptions in the Strait of Hormuz continue for several more weeks, global oil markets may not stabilise until next year or even 2027.

Aramco Chief Executive Amin Nasser disclosed that the market was currently losing around 100 million barrels of oil weekly because of the continuing disruptions.

“Markets are pricing rising chances of lasting disruption,” analysts at Deutsche Bank said, as longer-term oil contracts also recorded strong gains amid concerns over future supply shortages.

The geopolitical tensions have also rattled investors across global equity markets.

Futures tied to the S&P 500 and Nasdaq pointed to weaker openings on Wall Street after both indexes recently hit record highs. Major European markets, including London, Paris and Frankfurt, also traded lower as fears of renewed conflict deepened concerns about inflation and economic slowdown.

In Asia, South Korea’s KOSPI index led regional losses, dropping more than two per cent.