Oil prices jump as hopes for US-Iran deal to reopen Strait of Hormuz fade

Oil prices jumped on Monday as hopes for a near-term US-Iran deal over the Strait of Hormuz faded after President Trump rejected Tehran's latest proposal.

Futures on Brent crude for November delivery ( BZX26.NYM ) rose above $106 per barrel, while the US benchmark WTI crude ( CL=F ) rose above $94 per barrel.

Trump told Axios on Sunday that he expects US negotiators to hold further talks with Iran this week after he had rejected Tehran's latest proposal .

A few days earlier, Iranian Foreign Minister Abbas Araghchi offered to open the Strait of Hormuz, a key shipping route, and to restart nuclear negotiations within seven days if the Trump administration agreed to Tehran's terms.

"This renewed volatility in energy prices is keeping investors on edge and contributing to the slump in global government bonds," said David Morrison, senior market analyst at Trade Nation.

Higher oil prices have kept diesel near all-time highs in recent weeks, raising expectations that inflation will remain above the Fed's 2% target.

On Monday, the average price of diesel hovered at $6.45 per gallon, according to AAA data.

The national average price of gasoline stood at $4.47 per gallon, about the same as a week ago.

Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre .