US President Donald Trump rejected Iran's response to a US peace proposal, sending oil prices soaring on Monday amid concerns that the 10-week-old standoff will drag on and continue to paralyse shipping through the Strait of Hormuz.
According to Reuters, days after the United States made an offer in hopes of reopening talks, Iran on Sunday announced a response aimed at ending the war on all fronts, especially in Lebanon, where US ally Israel is fighting Iranian-backed Hezbollah militants.
Tehran also included a claim for war damages and stressed Iran's sovereignty over the Strait of Hormuz, Iranian state television reported.
Iran also called on the US to end the naval blockade, guarantee there will be no new attacks, lift sanctions and end the US ban on the sale of Iranian oil, the semi-official Tasnim news agency reported.
A few hours later, Trump rejected the Iranian proposal in a post on social media.
"I don't like it — TOTALLY UNACCEPTABLE," Trump wrote on Truth Social without providing further details.
The US has proposed a ceasefire before talks begin on more contentious issues, including Iran's nuclear program.
Oil prices rose more than $4 a barrel on Monday after news of the continued standoff, which leaves the narrow Strait of Hormuz largely closed. Before the war began on February 28, the waterway carried a fifth of the world's oil and liquefied natural gas, and the strait had become a key flashpoint in the war.
"The oil market continues to function as a geopolitical headline machine, with prices oscillating wildly based on every comment, denial or warning coming from Washington and Tehran," said Priyanka Sachdeva, senior market analyst at Philip Nova, according to Reuters.
Three tankers have passed through the strait in recent days.
Although traffic through the Strait of Hormuz has been reduced to a minimum compared to the pre-war period, shipping data from Kpler and LSEG showed that three tankers loaded with crude oil left the strait last week with tracking devices turned off to avoid an Iranian attack.
Polls show that war is unpopular among American voters facing significantly higher gas prices, less than six months before a national election that will decide whether Trump's Republican Party retains control of Congress.
The US has also found little international support, as NATO allies have rejected calls to send ships to open the Strait of Hormuz without a full peace agreement and an internationally approved mission.
It is unclear what new diplomatic or military steps might follow.
Trump is expected to arrive in Beijing on Wednesday. With pressure mounting to end the war and the global energy crisis it has caused, Iran will be among the topics Trump and Chinese President Xi Jinping will discuss.
Trump is pressuring China to use its influence to encourage Tehran to reach a deal with Washington.
Asked whether combat operations against Iran were over, Trump said in a statement broadcast on Sunday: "They are defeated, but that doesn't mean they are finished."
Israeli Prime Minister Benjamin Netanyahu said the war was not over because there was "still work" to be done to remove Iran's enriched uranium, dismantle enrichment facilities and address the issues of Iran's proxy groups and ballistic missile capabilities.
The best way to remove the enriched uranium would be diplomatically, Netanyahu said in an interview broadcast on CBS's "60 Minutes" on Sunday. However, he did not rule out the possibility of doing so by force, according to Reuters.
Iranian President Masoud Pazakhstani announced on social media that Iran "will never bow down to the enemy" and will "strongly defend national interests."
Despite diplomatic efforts to break the deadlock, the threat to the region's maritime routes and economies remained high.
In recent days, as reported by Reuters, the greatest escalation of fighting in and around the strait has been recorded since the ceasefire began in early April.
The United Arab Emirates said on Sunday it had intercepted two drones coming from Iran, while Qatar condemned a drone attack that hit a cargo ship coming from Abu Dhabi in its waters. Kuwait said its air defenses responded to hostile drones that entered its airspace.
Clashes also continued in southern Lebanon between Israel and the Iranian-backed militant group Hezbollah, despite a US-brokered ceasefire announced on April 16.
Ending hostilities with Iran would not necessarily mean an end to the war in Lebanon, Netanyahu said in an interview with "60 Minutes," in which he also said that Israeli planners underestimated Iran's ability to block traffic through the Strait of Hormuz.
"It took them a while to understand the magnitude of that risk, which they understand now," he said.
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