(Sharecast News) - Donald Trump has called Iran's response to America's proposed peace plan "totally unacceptable", sending oil prices higher on renewed fears there would be no immediate end to the conflict in the Middle East.
Following the outbreak of war at the end of February, the vital Strait of Hormuz has become too dangerous to pass, sending global energy prices soaring and curtailing supplies. America also started its own blockade of the narrow waterway last month, in a bid to halt Iranian exports.

A fragile ceasefire between the US and Iran was extended at the end of April, with Washington putting forward its peace proposals, which include Tehran giving up all nuclear ambitions.

On Sunday, Iran responded. It called for the war to end on all fronts, including Lebanon, compensation for war damage and emphasised Iranian sovereignty over the Strait of Hormuz. It also wants the US to end its blockade and lift sanctions on Iranian oil sales.

However, in a brief post on social media, Trump was swift to dismiss the response. He wrote: "I have just read the response from Iran's so-called 'Representatives.' I don't like it - TOTALLY UNACCEPTABLE! Thank you for your attention to this matter."

As at 0900 BST, benchmark Brent crude was trading 3% higher at $104.82 a barrel - having earlier broken past $105 - while West Texas Intermediate was up 4% at $98.94. Equity markets, however, were largely unaffected, with the FTSE 100 up 22 points.

Patrick Munnelly, partner, market strategy at Tickmill Group, said: "Trump's dismissal of Iran's latest nuclear proposal has effectively reversed last week's peace deal optimism, sending Brent up. With the Strait of Hormuz still constrained, the market is no longer pricing a clean de-escalation."

Neil Wilson, UK investor strategist at Saxo Markets, said: "Another hopeful Friday turns into a more worrying Monday. [Trump's] comments nudge in the direction of re-escalation - potentially more shooting - but I think there is going to be a fresh olive branch."

Susannah Streeter, chief investment strategist at Wealth Club, said: "The squabbling between the US and Iran over the baseline for a resolution to the war is now becoming the new normal. Investors are largely shrugging off the latest skirmishes and accusations from both sides."

However, she continued: "While there's some expectation that a major reignition of the war is less likely, given the US claims a ceasefire is still in place, severe supply constraints of commodities are set to continue with the Strait of Hormuz impassable. With the crisis now into the eleventh week, consumers, companies and countries are having to adapt to a world of constrained supplies."

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