Oil prices climbed on Thursday following Iran's announcement that it would not engage in direct negotiations with the United States, despite ongoing reviews of a U.S. proposal to end the war by senior Iranian officials [1]. Brent crude futures rose by 1.21% to $103.46 per barrel, while U.S. West Texas Intermediate (WTI) futures increased by 1.35% to $91.54 per barrel [1]. Iranian Foreign Minister Abbas Araghchi clarified to state media that exchanges through mediators do not constitute direct negotiations with the U.S., and Iranian state media reported Tehran's rejection of the U.S. ceasefire offer, instead presenting its own conditions for ending the conflict [1].
The situation is marked by conflicting narratives, as President Trump stated on Tuesday that the U.S. and Iran are "in negotiations right now" and suggested Tehran is eager to reach a deal, while Iran continues to deny any direct talks [1]. Trump also noted he had refrained from striking Iranian energy infrastructure due to ongoing negotiations [1].
Market analysts at TD Securities commented that the current oil shock is unlikely to prompt an aggressive response from the Federal Reserve. Although markets are pricing in the risk of rate hikes amid elevated inflation expectations, TD Securities expects the Fed to maintain a "wait and see" approach, with leadership still favoring rate cuts later in 2026 [1]. The bank emphasized that the Fed will "look through the energy shock" as long as longer-term inflation expectations remain stable and second-round effects are contained [1].
CONCLUSION
The rise in oil prices reflects heightened geopolitical tensions and uncertainty surrounding U.S.-Iran negotiations. Despite market concerns about inflation, analysts expect the Federal Reserve to remain cautious and not react aggressively to the energy shock. The ongoing situation continues to influence oil markets and investor sentiment.