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US Oil Update: Futures Rally 3% as Trump Says US-Iran Truce Is 'On Life Support'

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Crude oil futures climbed by over 3% in midday trading on Monday after US President Donald Trump cast doubt on the survival of a fragile ceasefire with Iran, warning that the deal is "on life support," signaling uncertainty over the Middle East conflict.

Front-month West Texas Intermediate crude futures rose by 3.01% to $98 per barrel, while Brent futures were up 3.09% to $104.54/bbl.

"The market remains sensitive to any developments tied to Hormuz, which prior to the conflict handled roughly 20% of global oil and LNG flows," Liquidity Energy strategists said on Monday.

Trump reportedly said he intends to suspend the federal gasoline tax temporarily to provide economic relief, an initiative he expects to phase out once fuel prices decline.

Gas prices in the US have soared by over 50% since the outbreak of the Middle East conflict on Feb. 28, hitting a high of $4.52 per gallon on Sunday.

"I think it's a great idea," Trump reportedly said. "We're going to take off the gas tax for a period of time, and when gas goes down, we'll let it phase back in."

On Monday, Trump said that a ceasefire with Iran was "on life support" after he rejected Tehran's response to a US peace proposal, prolonging the two sides' impasse and the effective closure of the Strait of Hormuz.

"I would call it the weakest,... I didn't even finish reading it," Trump told reporters at the White House. "I would say the ceasefire is on massive life support."

The US and Iran have rejected each other's latest peace proposals to end the 10-week conflict, as the two sides struggle to maintain a fragile ceasefire.

On Sunday, Tehran released a response to Washington's proposal, in which Iranian authorities demanded compensation for war damage, emphasized the country's sovereignty over the Hormuz, while calling on the US to end its blockade, lift sanctions and remove a ban on its crude sales.

However, Trump dismissed Iran's offer and demands in a social media post as "totally unacceptable."

Iranian foreign ministry spokesman Esmail Baghaei said Tehran's proposal for ending the recent war was reasonable, as the US continues to insist on "unreasonable demands" shaped by the Israeli regime.

Fueling bullish sentiment, the effective closure of the Hormuz is disrupting the global supply of crude, gas, and fuels, driving up energy prices and heightening inflation fears. Iran reportedly deployed small submarines to act as an "invisible guardian" of the Hormuz amid a series of rejected peace deals with the US.

Kpler said that 53 vessels operated by the world's top 10 container shipping lines entered the Persian Gulf before the outbreak of conflict, of which 79% are unable to exit.

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