Oil carries the risk premium into the new week. A reported Iranian cruise missile strike on a vessel in the Strait of Hormuz, still unconfirmed by independent sources, is the kind of headline that can gap crude higher at the open regardless of how it is ultimately verified, given the volume of global supply that transits the chokepoint. Iran's insistence that any reopening of Hormuz stays contingent on its own conditions, combined with Trump's rejection of Tehran's offer, points to a blockade and shipping disruption that persist rather than ease this week. Saudi Arabia's deepening exposure, with Houthi advances now threatening its oil exports through the Red Sea, adds a second, broadening front to the supply risk. Equity and FX markets are more likely to take direction from oil's reaction than from the diplomatic back and forth itself, with any escalation in the Gulf also supportive of the US dollar and other traditional havens.---Markets open the week with the Hormuz standoff unresolved, diplomacy stalled but not dead, and an unverified Iranian claim of a fresh missile strike in the Strait adding an immediate layer of headline risk to oil.In other news, Axios reports that Israeli Prime Minister Benjamin Netanyahu visited Abu Dhabi and met with UAE President Sheikh Mohamed bin Zayed al Nahyan on Sunday.Summary:Trump says he rejected Iran's proposal to reopen the Strait of Hormuz and end fighting, though he told Axios he expects US negotiators to hold more talks this week.Iranian Foreign Minister Abbas Araqchi says any reopening of Hormuz is contingent on Iran's conditions being met, and that mediators have not yet officially relayed a US rejection to Tehran.Iran's Fars News reports a naval cruise missile was fired at a vessel described as sailing an unauthorized route through the Strait of Hormuz; the claim has not been independently verified.US UN envoy Mike Waltz says Trump rejected the plan because it demanded immediate sanctions relief and the release of frozen assets upfront, in exchange for a promise to talk.Saudi Arabia is drawn deeper into the conflict as Houthi forces advance in Yemen, with schools in Riyadh shifting to remote learning for the week and Saudi oil exports through the Red Sea under threat.Iranian President Masoud Pezeshkian says Tehran is open to talks on its nuclear programme but will not accept bullying or coercion, reiterating Iran will not develop nuclear weapons.Markets head into the new week with the Strait of Hormuz standoff still unresolved and a fresh, unverified escalation claim adding to the uncertainty. Iran's semi-official Fars News agency reported that a naval cruise missile was fired at a vessel said to be sailing an unauthorized route through the Strait, a claim that has not been independently confirmed but lands directly on a chokepoint that carries a significant share of the world's seaborne oil.That headline arrives on top of an already stalled diplomatic track. President Trump said over the weekend he had rejected an Iranian proposal to reopen Hormuz and halt fighting, arguing Tehran's push for a deal reflected weakness rather than genuine compromise. Speaking to Axios by phone, however, Trump said he still expected US negotiators to engage in further talks this week, keeping a narrow diplomatic channel open even as the immediate offer was turned down.Iran's response has been to hold firm rather than soften. Foreign Minister Abbas Araqchi said any move to reopen Hormuz remains contingent on Iran's own conditions being met, and that only a negotiated solution can break the deadlock. He added that mediators involved in the talks, understood to include Qatari intermediaries, had not yet formally conveyed a US rejection to Tehran, leaving Iran technically still waiting on a definitive answer before deciding its next step.The dispute over terms looks to be the sticking point. US UN envoy Mike Waltz said Trump's rejection stemmed from Iran effectively asking for the immediate lifting of sanctions and release of frozen assets before any commitment to negotiate its nuclear programme in good faith. Iranian President Masoud Pezeshkian, for his part, said Tehran remained open to talks on the nuclear file and other issues but would not accept coercion, reiterating a prior commitment not to pursue nuclear weapons.The conflict is also widening geographically. Saudi Arabia has been pulled deeper into the war this month as Houthi forces advance in Yemen against the Saudi-backed government, with Saudi oil exports through the Red Sea now under threat and Riyadh schools shifting to remote learning for the week amid safety concerns. Yemen's Houthi-run health ministry said seven people were killed in a strike on a market in Taiz province, while Yemen's internationally recognised government said it had targeted a Houthi military camp in the same area.With the Fars News missile claim still unverified and the diplomatic track stalled but not dead, the coming session is likely to trade on headline risk out of the Gulf as much as on any confirmed development, keeping oil and safe-haven flows the primary channels through which the standoff reaches broader markets.---Where we left off last week:investingLive Americas market news wrap: Iran hopes spring eternal This article was written by Eamonn Sheridan at investinglive.com.