Oil prices rose Monday as investors assessed fresh obstacles to U.S.-Iran diplomacy and persistent security risks around Middle Eastern energy supplies. Front-month November Brent crude futures rose 3% to $107.5 a barrel, while West Texas Intermediate gained 2.7% to $94.88 a barrel. Both benchmarks had fallen Friday after a volatile week marked by shifting expectations around U.S.-Iran diplomacy and renewed attacks on Saudi Arabia.

President Trump rejected an Iranian proposal for a seven-day ceasefire that would have reopened the Strait of Hormuz and resumed nuclear negotiations in exchange for the U.S. lifting its blockade of Iranian ports, The Wall Street Journal reported, citing U.S. officials. Trump has also told aides that he expects another U.S. bombing campaign against Iran after the November midterm elections, the Journal reported. Iranian Foreign Minister Abbas Araghchi said Sunday that Tehran remained open to diplomacy. In a post on X, Araghchi said he and President Masoud Pezeshkian had gone to New York to pursue peace and that Iran remained ready for what he called “real diplomacy,” while warning that Tehran would stand firm against renewed military action.

Continued disagreement over Hormuz and persistent regional attacks should keep the geopolitical risk premium in oil elevated despite recovering Gulf crude flows, MUFG analysts said. The military backdrop also remains unsettled. Saudi Arabia’s air defenses intercepted and destroyed a ballistic missile launched by the Houthis toward the city of Khamis Mushait on Saturday, coalition spokesman Turki Al-Maliki said in a statement carried by the Saudi Press Agency. Separately, official statements carried by SPA said Houthi ballistic missiles and drones had been launched toward Riyadh and Khamis Mushait.

The latest attacks follow repeated Houthi strikes and attempted strikes against Saudi cities, energy infrastructure and shipping. The kingdom has increasingly relied on a combination of shipments through Hormuz and alternative export infrastructure as the conflict has disrupted traditional crude routes. Physical supply conditions also remain a concern. The supply-scarcity narrative in oil remains exceptionally strong and is dominating other market factors, Norbert Rücker, head of Economics and Next Generation Research at Julius Baer, said. For now, oil appears to be trading in a phase defined by fear and risk premiums, he said. About a fifth of the world’s oil and gas flowed through Hormuz before Iranian attacks on ships choked off the waterway after war broke out on Feb. 28.

In a sign of the wider impact, European natural-gas prices rose as prospects of prolonged LNG disruptions through the strait added to supply concerns ahead of winter. Benchmark Dutch TTF gas futures rose 2.4% to 73.63 euros a megawatt-hour in early trading. Lower Norwegian pipeline flows due to maintenance and subdued LNG traffic through Hormuz continue to tighten the market, ANZ analysts said, while recovering Chinese LNG imports could increase competition for cargoes. Write to Farhan Rafid at [email protected]