Iran War Ceasefire Fragile as US Rejects Tehran’s Latest Offer

By Kate Sullivan and Salma El Wardany

May 12, 2026 (Bloomberg) –Shipping traffic in the Strait of Hormuz remained at a standstill on Tuesday, with oil rising after US President Donald Trump rejected Iran’s latest offer and suggested the ceasefire may not hold.

Speaking to reporters in the Oval Office, Trump called Iran’s response to his proposal a “piece of garbage” and said the ceasefire was on “life support.” The comments came as Trump prepares to meet Chinese President Xi Jinping in Beijing on Thursday — a high-stakes meeting that he will enter under economic and political strain back home.

Read More: Trump to Meet Xi Thursday for High-Stakes US-China Summit

Iran responded to last week’s US peace proposal by demanding a lifting of Washington’s naval blockade and sanctions relief, while maintaining a degree of control over traffic through the strait, according to a person familiar with the matter, who asked not to be identified discussing sensitive information. 

Brent crude climbed 2% to trade above $106 a barrel, with the impasse between the US and Iran prolonging the disruption of flows through the strait. Concerns about an energy-driven wave of inflation kept bonds under pressure, with the 10-year Treasury yield rising two basis point to about 4.43%. 

Trump fell short of signaling the US would resume military attacks on Iran, as he previously threatened, and said reaching a diplomatic solution is “very possible.” 

But Tehran has given no public indication thus far that it’s willing to back down in a war that has seen it exert control over Hormuz and attack US military assets in the region, despite suffering great economic and military damage. 

The developments marked the latest failure to engineer a resolution to the 10-week war, which touched off a global energy crisis and continues to pose grave domestic political risks for Trump and his Republican party. 

Trump voiced support on Monday for a gasoline tax holiday to ease some of the burden on consumers, who’ve seen prices at the pump jump as a result of disruptions in international oil markets. The measure would cost the country billions of dollars a month.

Read More: Federal Gas Tax Suspension Would Cost US Billions Each Month

The US said Monday it’s releasing additional barrels of oil from its strategic reserves to help tame surging prices. The US Energy Department said 53.3 million barrels were awarded to companies including oil trader Trafigura Group and US refiner Marathon Petroleum Corp.

As the standoff continued, the Wall Street Journal, citing anonymous sources, reported that the United Arab Emirates had carried out assaults on Iran last month.

© 2026 Bloomberg L.P.

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