Hormuz on Hold: How Trump’s Rejection of Iran’s Peace Offer Is Shaking Oil and Currency Markets

The cautious optimism that had quietly built through last week evaporated over the weekend. President Donald Trump rejected Tehran’s latest peace counterproposal in a blunt Truth Social post, calling it “totally unacceptable.” Iran fired back, vowing it would “never bow.” With that, the door to a quick resolution slammed shut and global markets took notice.

At the heart of the standoff lies the Strait of Hormuz, the narrow chokepoint through which roughly 20% of the world’s traded oil flows. Ten weeks into the conflict, it remains largely closed, and every failed negotiation deepens the wound to global energy supply.

So what exactly went wrong at the negotiating table?

The gap between the two sides is not a narrow one. Washington arrived at the table demanding a 20-year moratorium on uranium enrichment and the full dismantling of Iran’s nuclear facilities terms that Tehran flatly refused. Instead, Iran offered a shorter suspension of enrichment, proposed sending a portion of its highly enriched uranium to a neutral third country, and insisted that any uranium transferred abroad be returned to Iran if the U.S. exits the agreement.

On the ground, Iran tied the reopening of the Strait directly to the lifting of the U.S. blockade on its ports. For the Trump administration, those terms amounted to a non-starter. Israeli Prime Minister Benjamin Netanyahu, meanwhile, made clear the war is “not over,” insisting that enrichment sites must be dismantled and nuclear material physically removed from Iranian soil.

Oil had a good week. Then Sunday happened.

Markets had spent much of last week pricing in hope. Japan’s Nikkei surged more than 4% in a single session. Commodity-linked currencies like the Australian and New Zealand dollars caught a bid. Oil, too, had softened both Brent and WTI posting 6% weekly losses as traders bet on an imminent deal.

Then reality struck. On Monday, Brent crude jumped over $4 to $105 a barrel, while WTI surged back toward $100. The reversal was swift and sharp, a reminder of just how headline-driven this market has become. As one senior analyst put it, oil is currently “trading like a geopolitical headline machine, with prices swinging sharply based on every comment, rejection, or warning coming from Washington and Tehran.”

Analysts at ANZ expect Brent to hold above $90 per barrel for the remainder of 2026, with a gradual easing toward $80–$85 into 2027 as demand slowly recovers and inventories rebuild. China, the world’s top oil importer, saw inbound shipments fall to their lowest level in nearly four years in April a stark illustration of the disruption’s real-world toll.

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The dollar is winning, but not for good reasons

In a strange twist, the U.S. dollar may emerge as a relative winner from the chaos at least in the short term. The greenback closed as the best-performing major currency last Thursday, buoyed by hawkish signals from the Federal Reserve. Minneapolis Fed President Neel Kashkari warned that a prolonged Strait of Hormuz closure could force the Fed to raise interest rates to combat war-driven inflation, lending the dollar unexpected support even as geopolitical risk deepened.

It is a delicate balance, and one that could tip quickly in either direction. A stronger dollar driven by war-inflation fears is hardly the kind of strength anyone on Wall Street wants to celebrate.

Gold is loving this. Bitcoin, not so much.

Not all assets are suffering equally. Gold surged to $4,750 last Thursday, outpacing equities and crypto alike, reaffirming its role as the go-to refuge when geopolitical uncertainty peaks. If the Iran standoff deepens following Trump’s rejection, gold may have further room to run.

Bitcoin told a different story. Despite persistent narratives casting it as “digital gold,” the cryptocurrency dropped nearly 2% to around $80,159 a steeper fall than equities behaving squarely like a high-beta risk asset rather than a store of value. For now, when genuine crises hit, it appears old-fashioned gold still wins the safe-haven race.

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