Oil prices climbed and U.S. Treasury yields continued their upward trend on Monday as negotiations between the United States and Iran over the resumption of energy supplies from the Persian Gulf showed little progress. The 10-year Treasury yield rose above 5.2 percent, reaching its highest level in two decades, while the 30-year yield surpassed 5.5 percent, approaching its highest mark since 2002. These increases reflect growing concerns about the economic impact of ongoing geopolitical tensions in the Middle East.
On Saturday, President Donald Trump rejected a cease-fire proposal from Iran aimed at reopening the strategic Strait of Hormuz, a critical chokepoint for global oil shipments. Iran’s foreign minister, Abbas Araghchi, described the rejection as a “first reaction” and indicated that further messages might come through intermediaries, signaling cautious openness to continued dialogue despite the setback.
The continued conflict in the Middle East has contributed to rising energy costs globally, adding pressure on consumers ahead of the U.S. midterm elections. Some Republican lawmakers have expressed criticism of the ongoing conflict, calling for a swift resolution to avoid further economic strain on voters already coping with high inflation and living costs.
Brent crude, the international benchmark for oil, edged up nearly 1 percent to around $105 per barrel, while West Texas Intermediate, the primary U.S. benchmark, traded just below $93 per barrel. Shipping companies remain cautious about transiting vessels through the Strait of Hormuz amid heightened risks. Additionally, advances by the Iranian-backed Houthi militia in Yemen have disrupted oil shipments through the Red Sea, leading Saudi authorities to temporarily shut a vital pipeline linking the Persian Gulf to the Red Sea. Threats from an Iranian-backed militia in Iraq have also raised concerns about the security of oil transportation routes.
In the United States, gasoline and diesel prices have surged since hostilities escalated. Diesel prices reached an average of $6.45 per gallon on Monday, marking more than a 70 percent increase since the outbreak of conflict and setting a new record high this month. Gasoline prices have risen by over 50 percent but tend to lag behind crude prices due to refining and distribution factors. In response to rising fuel costs, President Trump is reportedly considering a ban on diesel exports aimed at lowering domestic prices, though critics warn such a move could disrupt markets and have unintended economic consequences.