Trump Says Iran's New Proposal Unacceptable; Major Oil Producers Announce Output Increase, Oil Prices Drop at Open

Trump: Iran’s new proposal is unacceptable; the U.S. will launch an operation to guide stranded vessels out of the Strait of Hormuz.

According to CCTV News, on the evening of May 3 local time, US President Trump said in a telephone interview with an Israeli media that Iran's new proposal is unacceptable.

"This is unacceptable to me. I've looked into it; I've looked into everything—this is unacceptable."Trump said.

Iran has submitted a new proposal containing 14 points to the U.S. through the mediating party Pakistan, which mainly includes ensuring no military aggression, paying compensation, and establishing a new management mechanism for the Strait of Hormuz. Trump said on February 2 that he would soon assess Iran's new proposal, but "could not imagine" the proposal being "acceptable."

Additionally, Trump posted on social media that the United States will launch an operation in the Middle East on the morning of the 4th to guide vessels stranded in the Strait of Hormuz out of the area.

Trump said that if this action encounters any obstruction or interference at any stage, the U.S. will have to respond with strong measures.

Iran is "reviewing" the U.S. response to the 14-point proposal, and the current negotiations are not related to nuclear issues.

According to China Central Television news,On May 3, local time, Iranian Foreign Ministry Spokesperson Bahram Qasemi stated that the United States has responded to Iran’s “14-point proposal” via Pakistan, and Iran is currently reviewing this response; nuclear issues are not involved in the current negotiations.

Baghaei pointed out that Iran proposed to reach an understanding on a complete end to the war and to agree on its implementation within 30 days, with a focus on ending the conflict on all fronts, including Lebanon.

Baghaei said, "At this stage, the US and Iran are not conducting nuclear negotiations," and Iran's plan to end the war does not involve nuclear issues. He also said that the claims about Iran's commitment to demining in the Strait of Hormuz are purely fabricated by the media, and Iran does not accept negotiations under an ultimatum or imposed deadlines.

On the same day, a Gulf state media reported that Iran has "abandoned" some of the conditions it had previously set, and agreed to include the nuclear issue in negotiations with the United States.

Major oil-producing countries announced increased output for the third consecutive month, causing oil prices to plunge at the market open.

According to CCTV News,The Organization of the Petroleum Exporting Countries (OPEC) said in a statement on the 3rd that seven major oil-producing countries of "OPEC+" have decided to increase daily crude oil production by 188,000 barrels in June. This is the first decision made by "OPEC+" after the United Arab Emirates officially withdrew, and it is also the third consecutive month that it has announced an increase in production.

The representatives of Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman held an online meeting on the same day to discuss the situation and prospects of the international oil market. The statement after the meeting said that the seven participating countries decided to increase production on top of the voluntary production cuts announced in April 2023.

The statement also said that the participating countries will prudently maintain market stability and flexibly adjust production according to market conditions.

Oil prices,WTI crude oil futures opened down 2.75% this morning, with the decline narrowing later.

Analysts: The oil price will see a higher trading range.

Last week, international oil prices saw a significant rebound, with Brent crude futures prices breaking through the $110 per barrel mark, and WTI crude futures prices rising by about 12% in a week. Notably, institutions such as Goldman Sachs and Morgan Stanley have recently raised their oil price forecasts. Among them, Goldman Sachs has raised its forecast for the fourth quarter Brent crude price to $90 per barrel and the WTI crude price to $83 per barrel; Morgan Stanley expects the Brent crude price to be $80 per barrel in 2027 (previously forecast at $70 per barrel).

Huang Chen, an oil and shipping researcher at Huishang Futures, told the Futures Daily that multiple institutions have raised their oil price forecasts due to uncertainty regarding the end of the Middle East conflict and the possibility that the Strait of Hormuz blockade may persist longer, thereby intensifying expectations of a contraction in crude oil supply.

"Investment banks have collectively raised their oil price forecasts, primarily due to widespread market expectations that U.S.-Iran negotiations are unlikely to achieve a breakthrough. Overall, supply-demand imbalances and low inventories provide solid fundamental support, and the high-level volatility in oil prices is expected to persist, with limited room for a near-term pullback," said Ye Haiwen, Manager of the Energy & Chemicals Research Center at Guomao Futures.

“If oil prices continue to surge, they will inevitably adversely affect end-user demand; in some regions, a coexistence of tightened refined oil supply and declining consumption has already emerged. Meanwhile, rising expectations of Federal Reserve interest rate hikes will exert macro-level downward pressure on dollar-denominated commodities such as crude oil. In the short term, the prolonged closure of the Strait of Hormuz has not yet altered the oil price’s upward trend.” said Huang Chen.