Oil Bounces as Iran Calls US Ceasefire Plan 'Non-Viable'
WTI crude climbed back toward $92 after Iran rejected Washington's 15-point peace proposal, erasing part of yesterday's relief rally.
The oil market's ceasefire optimism lasted about 18 hours.
WTI crude bounced 1.5% Thursday morning to $91.81 per barrel after Iran's Revolutionary Guard called the US 15-point peace proposal "non-viable." That erases roughly a third of Wednesday's 4% drop that followed initial reports of the diplomatic overture.
Brent traded at $95.30, also recovering from yesterday's plunge below $100. The "peace premium" discount is starting to look premature.
The Back-and-Forth
Yesterday's price action told traders diplomacy was gaining traction. The Trump administration had sent a 15-point "Strategic De-escalation Plan" to Tehran via Pakistani mediators. The proposal reportedly offers sanctions relief if Iran rolls back its nuclear program and guarantees shipping through the Strait of Hormuz.
Iran's response this morning was blunt: the plan is non-viable. The Revolutionary Guard issued a statement calling several provisions unacceptable. Tehran counter-proposed a five-point framework that includes sovereign control over Hormuz—a non-starter for Washington.
WTI spiked $3 within minutes of the rejection headlines. The algorithmic traders are now conditioned to buy any hint of talks collapsing.
Volatility Is the Only Constant
March has been a roller coaster for crude:
| Date | WTI Price | Event |
|---|---|---|
| Feb 28 | $78 | US-Israel strikes begin |
| Mar 4 | $99 | Hormuz effectively closes |
| Mar 8 | $113 | Peak war premium |
| Mar 17 | $94 | First talk rumors |
| Mar 19 | $107 | Iran rejects informal overtures |
| Mar 23 | $89 | Trump "TACO" comment |
| Mar 25 | $87 | 15-point plan submitted |
| Mar 26 | $92 | Iran rejects plan |
That's a $35 range in under a month. Energy traders haven't seen this kind of volatility since 2020.
The pattern is predictable: diplomatic hints push prices down, rejections spike them back up. Until something structurally changes—either a real ceasefire or a real military escalation—expect the whipsaw to continue.
Strait Remains Closed
Hormuz hasn't reopened. Iran still controls passage, allowing only "non-hostile" vessels from countries that haven't backed the US or Israeli military campaign. Western tankers continue rerouting around the Cape of Good Hope, adding weeks and millions in shipping costs.
The economic impact extends beyond oil. LNG shipments are disrupted. Container traffic has rerouted. Insurance costs for Gulf shipping have tripled since February.
Even if a ceasefire materializes tomorrow, the infrastructure disruption takes time to unwind. JPMorgan analysts estimate oil will carry a "security tax" premium for the rest of 2026 due to new shipping routes and elevated insurance.
Market Positioning
Options data shows traders aren't picking a direction. Call and put volumes on crude futures remain elevated. The market is positioned for volatility in both directions.
For equities, the oil price swing matters. Sub-$90 crude favors airlines, retail, and consumer discretionary. Above $100 favors energy producers and pressures the Fed's inflation calculus.
Gas prices at the pump have jumped 40% since late February. Every week the Strait stays closed adds to that pain. The political pressure on both sides to find a resolution is real, but politics doesn't always produce rational outcomes.
What to Watch
Iran's counter-proposal is now in Washington's hands. The five-point plan reportedly demands sanctions relief, recognition of Hormuz sovereignty, and Israeli withdrawal from certain positions. That's a big ask.
The next 48 hours will determine whether talks continue or collapse. If Tehran and Washington find any common ground, oil could test $85. If talks break down entirely, $100+ is back on the table by week's end.
For now, the takeaway is simple: don't trust the moves. Yesterday's 4% drop felt like a breakthrough. Today's bounce shows how fragile the peace narrative remains.