Oil Prices Spike as Iran Conflict Hopes Fizzle

Oil prices surged higher on Thursday, fueled by dwindling hopes for an immediate end to the Iran conflict. Despite diplomatic efforts, Iranian President Masoud Pezeshkian told the United Nations General Assembly that Tehran would not surrender to US pressure.

Pezeshkian's comments followed a warning from US President Donald Trump that he could 'annihilate' Iran if a deal was not reached. A senior Iranian official said Tehran is reviewing Washington's response to an Iranian proposal, but significant differences remain.

The Strait of Hormuz has been a key focus for oil markets, with Iran effectively closing the waterway in February. The strait handled one-fifth of global oil and liquefied natural gas shipments prior to the conflict. On Wednesday, Iranian security chief Mohsen Rezaei said the waterway would not reopen until Tehran's conditions were met.

The rise in oil prices has driven expectations for more central bank interest rate hikes by the end of the year. The Federal Reserve raised rates last week, partly citing the impact of the energy-price shock.