U.S. President Donald Trump rejected Iran’s counterproposal to end the 10-week war in the Middle East, calling it “totally unacceptable,” while Tehran vowed to “never bow,” prolonging a standoff that has choked the Strait of Hormuz and roiled global energy markets.

“I have just read the response from Iran’s so-called “Representatives.” I don’t like it — TOTALLY UNACCEPTABLE!” the president said in a Truth Social post on Sunday.

Iranian state media framed Tehran’s response as a rejection of the U.S. proposal, which it characterized as a demand for “surrender.” In its response to the latest U.S. proposal, Tehran has insisted on war reparations, full sovereignty over the Strait of Hormuz, an end to sanctions, and the release of frozen Iranian assets.

Iranian President Masoud Pezeshkian struck a defiant tone as negotiations proceeded Sunday. “We will never bow our heads before the enemy, and if talk of dialogue or negotiation arises, it does not mean surrender or retreat,” he said on X in Persian, translated via Grok.

Israeli Prime Minister Benjamin Netanyahu, in an interview with CBS News’ “60 Minutes,” said the war was not over because there was “more work to be done.” Iran had neither surrendered its enriched uranium nor dismantled enrichment sites, and continues to support regional proxies and advance its ballistic missile program, he said.

The Wall Street Journal reported that Iran rejected U.S. demands regarding its nuclear program and stockpile of highly enriched uranium. Instead, Tehran proposed separate negotiations and offered to dilute some of its highly enriched uranium and transfer the rest to a third country, with a provision that it be returned if Washington exits any eventual deal, the Journal reported.

The U.S. wants assurances that Iran will end its nuclear program as part of any peace deal. Iran has reportedly agreed to suspend enriching uranium, but for a shorter period than the 20-year moratorium proposed by the U.S. Iran has rejected dismantling its nuclear facilities.

Tehran has also demanded that the U.S. end its blockade of Iranian ports as a condition for it to open the Strait of Hormuz.

A Qatari LNG tanker crossed the strait on Sunday for the first time since the war began, a passage that was reportedly approved by Iran to build confidence with Qatar and Pakistan, though the symbolic opening did little to ease broader market concerns.

“Oil has stayed highly sensitive to headlines, with markets caught between hopes of de-escalation and the risk that sporadic clashes keep an energy-risk premium embedded in forex exchange and rates,” said Christopher Wong, currency strategist at OCBC Bank.

U.S. West Texas Intermediate futures with June delivery advanced 4.96% to $100.3 per barrel on Monday, while the international benchmark Brent crude futures with July delivery rose 4.92% to $105.76 per barrel. 

Iran continued drone attacks on Gulf neighbors over the weekend. The UAE said it intercepted two drones coming from Iran, Qatar condemned a drone attack that struck a cargo ship in its waters, and Kuwait said its air defenses had encountered hostile drones that entered its airspace.

Iranian Army spokesperson Brigadier General Mohammad Akraminia, in an interview with IRNA, warned of “surprising options” if adversaries made another “miscalculation,” saying any future aggression would take the conflict into areas “the enemy has not anticipated.”

Iran’s new Supreme Leader Mojtaba Khamenei, who has not appeared publicly since the war began, also issued “new and decisive directives” for military operations, state broadcaster reported, without elaborating.

The unresolved standoff hangs over Trump’s upcoming summit with Chinese President Xi Jinping later this week in Beijing, where the Iran war is likely to take center stage.

Washington has sought to press Beijing to lean on Tehran to reopen the strait, though China’s appetite to act as a pressure mechanism remains unclear.

The base case, according to Ben Emons, managing director at Fed Watch Advisors, is a “managed détente with potentially thin deliverables” — likely amounting to vague joint language on de-escalation and keeping oil flowing.

China shares Washington’s interest in a stable Hormuz, Emons said, but cannot be seen making concessions that undercut its partnership with Tehran or risk the reputational exposure of a failed mediation effort.

In a high-profile diplomatic overture, Beijing hosted Iranian Foreign Minister Abbas Araghchi last week, with Chinese top diplomat Wang Yi reaffirming the “strategic partnership” between the two countries while urging Tehran to pursue a diplomatic resolution to the regional conflict and refrain from hostilities.