Growing concerns over escalating Middle East situation as Brent oil rebounds by 4% to nearly $104 after sharp drop

On Monday, oil prices rebounded slightly after a sharp drop due to concerns that other countries may join the Middle East war, and an Iranian lawmaker ruled out the possibility of negotiations with the U.S. Brent crude prices rebounded by about 4% to around $104 per barrel after plunging 11% on Monday. Earlier, U.S. President Trump delayed threats to strike Iran's energy infrastructure for five days and claimed to be in talks with Iran. However, Tehran denied negotiations were taking place, while Israel continued with attacks. The WTI crude price also rose nearly 4%. Reports indicate that U.S. allies in the Persian Gulf are gradually joining the fight. The report quoted sources as saying that this includes Saudi Crown Prince Mohammed bin Salman, who is eager to rebuild deterrence capabilities and is about to decide to join the attacks. Meanwhile, Iranian Parliament Deputy Speaker Ali Nikzad stated that the Strait of Hormuz would not return to its previous state and would not negotiate with Washington. Due to concerns that hostile actions between the U.S., Israel, and Iran in the Middle East could trigger a global energy crisis and inflation, Brent crude has risen over 40% this month. This war has disrupted the passage through the Strait of Hormuz, forcing oil-producing countries in the Persian Gulf to cut production by millions of barrels per day. The prices of diesel and aviation fuels, among other petroleum products, have even exceeded crude oil, putting pressure on consumers and causing unease among governments. Daan Struyven, co-head of global commodities research at Goldman Sachs, said in an interview, "If this shock lasts longer, the extreme supply tightness currently concentrated in the Middle East and Asia could spread." He pointed out that eventually, a rebalancing of supply will be needed through demand suppression. Iran is reportedly reviewing a letter from the U.S. received through intermediaries, citing a senior Iranian Foreign Ministry official. Meanwhile, reports indicate that natural gas facilities in the central Iranian city of Isfahan were attacked. Analysts, including Helima Croft of Canada's Royal Bank Capital Markets, noted in a report, "It is not yet clear how much progress has been made through back-channel negotiations, nor whether the Islamic Revolutionary Guard Corps (IRGC) in control of the Strait of Hormuz is willing to reach a resolution at this stage. Ultimately, what may matter most to the physical market are ships, not empty rhetoric." While most major traffic routes through the Persian Gulf remain stalled, a small number of ships have successfully left the Gulf in recent days. Over the weekend, Trump threatened to bomb Iran's energy infrastructure unless Iran fully opens the Strait of Hormuz within 48 hours. Insiders believe his decision to pause airstrikes was to control oil prices, a point Trump admitted on Monday by saying, "Once a deal is reached, oil prices will plummet." The U.S. president also suggested that Washington and Tehran could jointly control the Strait of Hormuz. He said that if feasible, this narrow waterway connecting the Persian Gulf and global markets could reopen soon. The constantly changing messaging from U.S. leaders has left investors exhausted and trading volumes suppressed as traders sift through nearly incessant, sometimes contradictory headlines. Four of the top six largest historical movements in Brent crude futures occur after conflict outbreaks. Senior Research Fellow Will Todman of the Middle East Program at the Center for Strategic and International Studies (CSIS) said, "In the series of terrible choices facing President Trump, perhaps a negotiated outcome is the best. However, Iran will view these talks with extreme skepticism, fearing President Trump is merely stalling to deploy more military forces to the region."