Oil prices fell sharply when Asian markets opened on Monday after US President Donald Trump announced that he had cancelled a planned military strike on Iran.
The decision reduced geopolitical risk across energy markets and eased fears of further disruption to oil supplies from the Middle East.
North Sea Brent crude dropped 4.4% to $84.10 per barrel. US West Texas Intermediate fell 4.5% to $80.89 per barrel.
Early on Sunday, Trump said he had suspended the attack after receiving requests from Tehran and several other Middle Eastern countries.
In a post on Truth Social, Trump said Iran and other regional governments had asked Washington to stop the operation because the parties had agreed on a framework.
He said the proposed arrangement included the immediate, full and unrestricted reopening of the Strait of Hormuz. It would also address what he described as Iran’s nuclear threat.
The announcement came after reports suggested that Trump was considering a new phase of strikes against Iran. Prospects for a diplomatic settlement had weakened since the conflict began on February 28.
Tehran responded cautiously to Trump’s statement. Acting Iranian Defence Minister Seyed Majid Ibnoreza told state media that Iran viewed enemy statements as part of psychological and information warfare. However, he said the country would treat every threat seriously.
Fars News Agency, which is close to Iran’s Revolutionary Guards, rejected Trump’s proposal. In a Telegram post, it described his demands as only a “wish list.”
Oil traders welcomed the reduced risk of immediate military escalation. However, markets remain sensitive to developments involving Iran, the Strait of Hormuz and regional security.
Any failure in negotiations could quickly restore supply concerns and push prices higher again. For now, Trump’s decision has encouraged hopes that diplomacy may prevent another round of attacks and protect vital shipping routes this week.
