Oil Price Today (September 28): Crude oil gains to $106 as Trump rejects Iran deal. Where are prices headed?

Oil prices rebounded more than 1% on Monday after US President Donald Trump rejected an Iranian peace proposal aimed at resolving the conflict and reopening the Strait of Hormuz, keeping tensions in the Middle East elevated.

Iran presented a peace proposal at the UN General Assembly in New York last week, saying it had been passed to the United States through Qatari mediators. Trump said on Saturday that he had rejected the proposal, although he told Axios in a phone interview on Sunday that he expected US negotiators to hold further talks this week.

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Crude oil price on September 28

Brent crude futures rose $1.65, or 1.50%, to $106 a barrel, while US West Texas Intermediate crude was at $93.40 a barrel, up 99 cents, or 1.10%.

Geopolitical risks remained elevated as the Houthis and Iran continued attacks on Saudi Arabia, leaving regional oil supply flows vulnerable. Yemen's Saudi-led coalition said early on Saturday that it had intercepted two ballistic missiles and two drones launched by the Iran-backed Houthis towards the kingdom.

Brent gained 0.4% last week, while WTI fell 7.9% as concerns grew that the US could ban diesel exports to ease record prices. Such a move could reduce US refining output. A restriction on US diesel exports would tighten supplies outside the United States, with European prices already responding to the prospect of lower American supply.

Meanwhile, crude oil exports from key Middle East producers recovered in September to 12.8 million barrels per day, their highest level since the war began in February, preliminary data from Kpler showed on Monday. The increase was driven by higher exports from Saudi Arabia and the United Arab Emirates, a Reuters report stated.

The recovery followed a rise in shipments through the Strait of Hormuz, which were on track to reach about 7.4 million bpd this month, the data showed. Saudi Arabia shifted exports from the Red Sea port of Yanbu to its eastern Ras Tanura port after attacks damaged its East-West pipeline.

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Where are prices headed?

The uncertainty has made it more difficult for major banks to assess the direction of oil prices. JPMorgan said it had lost visibility on the market and, for the first time since the Iran war began in February, no longer had a clear baseline scenario. The bank said the escalation in tensions was adding to concerns about an already worsening supply shock.

"We simply don't know how to model the endgame," JPMorgan analysts said, highlighting uncertainty over how the conflict could develop. At the start of the conflict, the bank had assumed there were economic thresholds the US administration would not cross. Six months into the war, JPMorgan said many of those thresholds had been crossed, while there was still no clear exit strategy.

The possibility of further supply disruptions has also increased the potential for higher oil prices. Daan Struyven, co-head of global commodities research at Goldman Sachs, said recent attacks showed that disruptions to shipping could spread and become more severe.

Goldman Sachs has outlined a scenario in which oil prices could rise as high as $120 a barrel if attacks on vessels in the Middle East intensify. If exports return to normal, the bank expects oil prices to move back towards $80 a barrel.

Struyven told Bloomberg that shipping risks had become a key driver of oil prices. Goldman Sachs sees "meaningful upside to crude oil prices" and also expects natural gas and refined product prices to rise. Struyven said supply shocks in gas and fuels are larger than those in the crude market.

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