Oil prices fell sharply when Asian markets opened on Monday, as investors welcomed a three-night pause in US attacks on Iran. The break raised hopes that Washington and Tehran could restart negotiations.
Within 30 minutes of trading, Brent crude dropped 5.89% to $91.08 per barrel. It briefly fell below $90. West Texas Intermediate declined 5.73% to $84.19 per barrel.
Mike Waltz, the US ambassador to the United Nations, said President Donald Trump had given negotiations with Iran another opportunity. He added that talks were continuing, although Trump had not ruled out stronger military action.
Before Friday, US forces had attacked Iran for 13 consecutive nights. The latest campaign began on July 7. Iran responded by closing the Strait of Hormuz and launching missile and drone attacks on US bases in Bahrain, Kuwait and Jordan.
Iranian military spokesperson Mohammad Akraminia said US forces had stopped their attacks during the previous two nights. Because Iran follows a policy of proportional response, he said Tehran had also suspended its retaliatory operations.
Markets now hope both sides can reach a ceasefire and reopen shipping through the Strait of Hormuz. The strategic route carries about one-fifth of the world’s daily oil and liquefied natural gas supplies.
However, a separate threat still worries traders. Yemen’s Houthis announced plans to block the Red Sea and Bab al-Mandab Strait for vessels travelling from Saudi Arabia. Saudi Arabia remains the world’s largest crude oil exporter and relies heavily on that route.
A US-Iran memorandum signed on June 17 had previously pushed Brent prices slightly above $70. Renewed tensions in July sent prices higher again. Monday’s decline showed how quickly the market reacts to military developments, diplomacy and shipping risks across the region.
Analysts will continue watching diplomatic signals, tanker movements and changes in regional military activity throughout this week.
