U.S. stock futures slid and crude oil prices surged Monday after President Donald Trump rejected an Iranian proposal to end the seven-month war, rattling investors already braced for a longer conflict.
Crude prices jumped roughly 3% to around $108 a barrel, while Dow, S&P 500 and Nasdaq 100 futures fell 0.36%, 0.49% and 0.98% respectively in pre-market trading, according to Reuters. Treasury yields climbed as the spike in oil revived inflation fears.
The move followed Trump’s weekend rejection of a Qatari-mediated peace offer that Iran unveiled on the sidelines of the U.N. General Assembly. Under the plan, Tehran would reopen the Strait of Hormuz and restart nuclear talks within seven days if Washington lifted its naval blockade, removed oil sanctions and restored a regional ceasefire, Axios reported.
“They want to make a deal, but it is not the deal that I want to make,” Trump told Axios in a Sunday phone interview. “It is what we would have maybe agreed to a year ago. They overplayed their hand.”
Asked whether he was considering resuming military strikes against Iran, Trump said, “I am always thinking about it.”
The Strait of Hormuz is the world’s most important oil chokepoint. About 20 million barrels a day passed through the waterway in 2024, the equivalent of roughly 20% of global petroleum consumption, according to the U.S. Energy Information Administration. Any sustained disruption feeds directly into pump prices and household budgets.
The knock-on effects are widening. LSEG data cited by Reuters showed the 60-day correlation between oil prices and Wall Street futures at its highest level since late May, meaning equity portfolios and 401(k) balances are now moving in lockstep with each escalation in the Persian Gulf.
Behind the public rejection, shuttle diplomacy continues. Qatari mediators are expected to meet separately with Iranian Foreign Minister Abbas Araghchi and U.S. envoy Steve Witkoff as early as Monday, Axios reported, though sources cautioned it was unclear whether the gaps could be bridged.
Iran has said it still wants a diplomatic solution. Trump’s own U.N. ambassador, Mike Waltz, told CNN’s Jake Tapper the offer was rejected because the administration viewed it as a cynical attempt to secure concessions up front.
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