DUBAI/WASHINGTON, May 11 : President Donald Trump's swift rejection of Iran's response to a U.S. peace proposal pushed oil prices higher on Monday, fuelling concerns that the 10-week-old conflict will drag on and continue to paralyse shipping through the Strait of Hormuz.
Days after Washington floated an offer aimed at reopening negotiations, Iran on Sunday released a response focused on ending the war on all fronts, including Lebanon, where U.S. ally Israel is fighting Iran-backed Hezbollah militants.
Tehran also demanded compensation for war damage, emphasised its sovereignty over the Strait of Hormuz, and called on the United States to end its naval blockade, guarantee no further attacks, lift sanctions and remove a ban on Iranian oil sales.
Within hours, Trump dismissed the proposal in a social media post.
"I don't like it - totally unacceptable," Trump wrote on Truth Social, without giving further detail.
The U.S. had proposed an end to fighting before starting talks on more contentious issues, including Iran's nuclear programme.
Tehran responded on Monday by defending its stance.
"Our demand is legitimate: demanding an end to the war, lifting the (U.S.) blockade and piracy, and releasing Iranian assets that have been unjustly frozen in banks due to U.S. pressure," Foreign Ministry spokesperson Esmaeil Baghaei said.
"Safe passage through the Strait of Hormuz and establishing security in the region and Lebanon were other demands of Iran, which are considered a generous and responsible offer."
Oil prices surged by $4 a barrel on Monday, before slipping back slightly, as the deadlock left the Strait of Hormuz largely closed. Before the war began on February 28, the narrow waterway carried one-fifth of the world's oil and liquefied natural gas, and has since become a central pressure point in the conflict.
A map showing the inbound and outbound shipping lanes in the Strait of Hormuz, in addition to the the maritime boundary between Oman and Iran.
Traffic through the strait is at a trickle compared to before the war. Shipping data on Kpler and LSEG showed that three tankers laden with crude exited the waterway last week, with trackers switched off to avoid Iranian attack. "REUTERS
