Oil prices fell more than 5% on Monday after the United States and Iran paused military strikes over the weekend. The development raised hopes of a diplomatic breakthrough and eased concerns over immediate supply disruptions.
Iran-US Tensions Tehran says it never sought talks with Washington to end war
Brent crude futures dropped $5.70, or 5.9%, to $91.08 a barrel by 0804 GMT. During early trading, the benchmark briefly slipped below the $90 level.
Meanwhile, U.S. West Texas Intermediate (WTI) crude fell $4.80, or 5.4%, to $84.51 a barrel.
Both benchmarks reached their lowest levels in nearly a week after climbing steadily over the previous three weeks.
Earlier, Brent crude touched $100 a barrel as the conflict disrupted oil shipments through the Strait of Hormuz and expanded into the Red Sea, affecting exports through the Bab el-Mandeb Strait.
Diplomacy lifts market sentiment
U.S. Ambassador to the United Nations Mike Waltz said President Donald Trump paused military strikes to allow more time for diplomacy.
However, analysts cautioned that the temporary halt does not guarantee a lasting resolution.
PVM analyst John Evans said the market continues to search for positive developments despite ongoing uncertainty. He added that oil prices may remain volatile until supply routes fully recover.
Shipping disruptions continue
Despite the pause in fighting, shipping activity remained limited.
According to Kpler, fewer than 10 commodity vessels passed through the Strait of Hormuz each day over the weekend.
MST Marquee analyst Saul Kavonic said shipping traffic is likely to recover gradually because many operators remain cautious about security risks.
Meanwhile, traffic through the Bab el-Mandeb Strait also declined after Yemen’s Houthis attacked Saudi oil facilities along the Red Sea coast.
Societe Generale analysts estimate that every month without a resolution in the Red Sea could add at least $10 per barrel to oil prices.
Supply risks remain
Analysts said ongoing disruptions in the Middle East and Russia’s war in Ukraine continue to pose risks to global energy supplies.
UOB analysts warned that prolonged supply interruptions could keep oil prices elevated and increase inflationary pressures worldwide.
Ukraine also reported carrying out fresh drone strikes on several Russian oil facilities over the weekend.
