Oil prices surged across Asian markets on Monday following U.S. President Donald Trump’s dismissal of Iran’s latest conditions for ending hostilities in the Middle East. This rejection raised concerns about potential disruptions to oil supplies through the Strait of Hormuz. Trump’s outright dismissal of Tehran’s response to his peace overture heightened the risk of renewed conflict and underscored the growing divide between the two sides. “I have just read the response from Iran’s so-called ‘Representatives.’ I don’t like it – totally unacceptable,” the president stated ahead of his planned visit to China, where the ongoing conflict is expected to dominate diplomatic discussions.
In response, Iranian President Masoud Pezeshkian asserted on X that a willingness to engage in dialogue does not imply surrender. “We will never bow down to the enemy,” he wrote, emphasizing Iran’s determination to continue negotiations without yielding. Lloyd Chan, an analyst at Japan’s MUFG Bank, noted that the president’s swift dismissal “underscores the wide gulf between both sides, pointing to a risk of prolonged uncertainty rather than rapid de-escalation.” Chan warned that this situation suggests a persistent geopolitical risk premium as disruptions in Hormuz continue.
The market reaction was immediate, with Brent crude oil prices jumping 4.75% to $99.95 a barrel, while U.S. West Texas Intermediate (WTI) rose 4.16% to $105.50. Asian equities displayed mixed results: Japan’s Nikkei fell 0.36% to 62,486.84, and Hong Kong’s Hang Seng dropped 0.34% to 26,303.16. In contrast, Shanghai’s Composite gained 0.89% to 4,216.96, and South Korea’s KOSPI rose about four percent, driven by gains in technology stocks. In Tokyo, Nintendo shares plummeted nearly 10% after the gaming giant warned of lower profit forecasts and announced a price increase for its upcoming Switch 2 console. The broader market sentiment reflected the ongoing uncertainty surrounding the Middle East conflict.
U.S. Treasury Secretary Scott Bessent, who is set to travel to Japan, South Korea, and China later this week, will meet with Japanese Prime Minister Sanae Takaichi and South Korean officials. Discussions are likely to include recent yen-support measures implemented by the Tokyo government. In Seoul, Bessent is scheduled to meet Chinese Vice-Premier He Lifeng. “Economic security is national security,” Bessent posted on X, underscoring the connection between trade and geopolitical stability. The timing of these visits coincides with President Trump’s preparations for a high-stakes summit with Chinese President Xi Jinping in Beijing, confirmed for Wednesday through Friday. The two leaders previously brokered a one-year trade truce in October after a year marked by reciprocal tariffs. Overall, the sharp rise in oil prices reflects heightened geopolitical risk premiums linked to the Middle East stalemate, while equity markets remain cautious ahead of the upcoming U.S.–China dialogue and its potential impact on global trade flows.
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