Oil prices fell by around $4 per barrel on Monday after U.S. President Donald Trump postponed a planned military strike against Iran in an effort to secure a swift agreement aimed at curbing Tehran’s nuclear ambitions and reopening the Strait of Hormuz.
As of 23:52 GMT, Brent crude futures had dropped $4.08, or 4.64%, to $83.85 per barrel, while U.S. West Texas Intermediate (WTI) crude fell $4.01, or 4.74%, to $80.66 per barrel.
Both benchmarks had surged by more than 20% last month following the resumption of hostilities between the United States and Iran and mounting security concerns after attacks on several oil tankers off the coast of Oman, which discouraged shipping companies from entering the Gulf to load crude.
In a sign of easing tensions, Trump said late Saturday on his Truth Social platform that Iran and several other Middle Eastern countries had requested additional time to finalize an agreement that would lead to the “immediate, full, and comprehensive” reopening of the Strait of Hormuz and bring an end to Iran’s nuclear threat.
Tony Sycamore, a market analyst at IG, said the key focus this week will be whether optimism over a potential agreement fades, as it did last week.
“The main question is whether this week will repeat last week’s pattern, with hopes for a deal diminishing as Iran maintains its position and continues leveraging its control over the Strait, potentially through an attack on a U.S. base or an oil tanker passing through the waterway,” Sycamore said.
Shipping data released on Monday showed that two tankers carrying Saudi crude transited the Bab al-Mandab Strait from the Red Sea earlier in the week, while traffic through the Strait of Hormuz slowed following reports of attacks on commercial vessels.
The UK Maritime Trade Operations (UKMTO) agency also reported three additional attacks on oil tankers since Saturday.
On Sunday, the OPEC+ alliance approved an increase in oil production quotas of approximately 188,000 barrels per day starting in September, continuing the phased reversal of voluntary production cuts.
Trump also announced that new negotiations with Iran would begin on Monday after he suspended military action, provided that a rapid agreement could be reached.
Speaking to reporters aboard Air Force One on Sunday, Trump said:
“It’s clear they don’t want to be attacked. They knew the scale of the attack because they saw it developing. Right now, we’re talking to them as part of negotiations. Those talks will begin tomorrow (Monday) afternoon.”
Iran confirmed on Sunday that it is nearing an agreement with Oman regarding the strategic waterway, through which around 20% of global oil production passes.
Source: Reuters
