Oil prices rose on Thursday after the Islamic Republic’s foreign minister said Iran indicated it had no intention of negotiating directly with the United States, even though U.S. proposals to end the war were being considered by senior officials in Tehran.
International benchmark Brent crude oil futures rose 3.8% to $106.12 per barrel, while U.S. West Texas Intermediate futures rose 3.6% to $93.61 per barrel.
Iranian Foreign Minister Abbas Araghchi told state media on Wednesday that exchanges between the two countries through intermediaries do not constitute “negotiations with the United States,” according to Reuters.
Iranian state media reported that the Iranian government rejected the US ceasefire offer and instead offered its own terms for ending the conflict.
The comments came as the U.S. and Iranian governments continue to give differing explanations about the status of the talks.
President Trump said Tuesday that the United States and Iran are “currently negotiating,” suggesting that Iran is keen to strike a deal despite the Islamic Republic’s denials of direct negotiations. Speaking in the Oval Office, President Trump said he backed away from earlier threats to attack Iran’s energy infrastructure “based on the fact that we are negotiating.”
Analysts at investment bank TD Securities said the oil shock is unlikely to trigger an aggressive policy response from the Federal Reserve.
Markets are starting to price in the risk of rate hikes on the back of rising inflation expectations, but TD said the Fed is likely to remain in “wait-and-see” mode, with Fed leaders still leaning toward lowering rates in the second half of 2026.
The bank added that “the Fed intends to weather the energy shock” as long as long-term inflation expectations are maintained and secondary effects remain contained.
