International benchmark Brent crude futures for July gained 3.4% to close at $107.77 a barrel. U.S. West Texas Intermediate futures for June rose 4.2% to settle at $102.18 per barrel.
President Donald Trump has rejected Iran’s counteroffer to a U.S. proposal to end the conflict. Trump on Monday dismissed Tehran’s offer as “garbage” and warned that the ceasefire is on “life support.”
“We’re in a stalemate, a frozen conflict,” Amos Hochstein, who served as a senior energy advisor to former President Joe Biden, told CNBC’s “Squawk Box.”
“In the meantime, the straits are closed so we’re in a no war, no oil, no straits condition,” Hochstein said. A breakthrough is unlikely this week as Trump heads to China to meet with President Xi Jinping, he said.
Oil prices will likely remain elevated, in a range of $90 to $100 per barrel, through the rest of the year and into 2027 even if Hormuz reopens in early June, Hochstein said. The oil market is heading toward a cliff if the U.S. and Iran don’t strike a deal by June, he said.
“When you fall off the cliff in oil and energy, it’s very hard to get back up,” Hochstein said. “And then it’s not about normalizing, then it takes a really long time.”
Trump has three options at this point and none of them are good, said Admiral James Stavridis, former NATO Supreme Allied Commander. The president can either walk away from the conflict, resume a massive bombing campaign, or try to reopen Hormuz by force, Stavridis told CNBC’s “Squawk Box.”
Reopening Hormuz with force is the most likely option right now, Stavridis said. But it will require significant naval resources, some troops on the ground and will cost a billion dollars a week, he said.
Since the U.S. and Israeli-led war against Iran started on Feb. 28, WTI and Brent are both up more than 45%. “Oil prices have been volatile and can rise further if US-Iran dealmaking remains thorny,” Citi said in a note.
Re-escalation in the Iran war is certainly possible, said Henry Wilkinson, chief intelligence officer at the geopolitical risk service firm Dragonfly. Trump may ask Xi to press Iran to accept U.S. terms later this week during talks between China and the U.S., Wilkinson told CNBC’s “Squawk Box Asia.”
The oil market will take until 2027 to normalize if the Strait of Hormuz stays blocked beyond mid-June, Saudi Aramco CEO Amin Nasser warned Monday.
“If the Strait of Hormuz opens today, it will still take months for the market to rebalance, and if its opening is delayed by a few more weeks, then normalization will last into 2027,” Nasser, who heads the world’s largest oil company, told investors on the company’s first-quarter earnings call.