Brent crude futures surged toward $107 per barrel on Thursday, March 26, after Iran formally rejected a US peace proposal, reversing several days of cautious optimism that had pulled prices down from earlier highs. The spike represented a nearly 4 percent move in a single session — the sharpest since the war's opening week. [1]

The rejection shattered a fragile calm. Markets had been pricing in a small probability of a diplomatic off-ramp through the Muscat talks. When Iran's foreign ministry said Washington's terms were "unacceptable," the oil futures curve repriced immediately. Front-month Brent moved from $102 to $107 in hours. [2]

Brent has since pulled back slightly but remains well above $100 — a level it has held for most of March. The international benchmark now sits roughly $20 above WTI, reflecting the fact that Europe and Asia are far more exposed to Gulf supply disruption than the United States. European refiners, who depend on Middle Eastern crude via Suez and the Red Sea, face a compounding problem: the Hormuz blockade reduces supply from the east while the Houthi threat raises the cost of what remains.

The oil market is in steep backwardation, with near-term contracts trading well above longer-dated ones. That structure signals physical scarcity, not speculation. Traders are paying a premium for oil today because they cannot be certain it will be available tomorrow.

For European consumers already paying record electricity prices, the March 26 spike translated immediately into higher diesel and jet fuel costs. Airlines are announcing fuel surcharges. Trucking companies are renegotiating contracts. The price signal travels at the speed of a futures trade but arrives at every household with a two-week lag.

-- HENDRIK VAN DER BERG, Brussels