Oil prices tumbled sharply on Monday as markets reacted to signs of a temporary halt in hostilities between the United States and Iran a pause traders hope could help stabilise one of the world’s most critical energy corridors.
Brent crude, the global benchmark, dropped more than 9%, falling to $87.59 a barrel at one stage. The decline marks a dramatic reversal from last week, when prices surged above $100 amid fears of escalating conflict.
The fall followed comments from the US ambassador to the UN, who said American attacks on Iran had been halted for a second consecutive night to give “talks some space.” Iran echoed the sentiment, with a military spokesperson saying Tehran had paused its “retaliatory” strikes.
The conflict had triggered a steep rise in oil prices earlier this month after fighting effectively shut down the Strait of Hormuz a vital shipping route that normally carries around 20% of the world’s oil and LNG. Any disruption to the strait sends shockwaves through global energy markets.
When Washington and Tehran signed a memorandum of understanding in June to halt military operations and reopen the strait, oil prices quickly fell back to pre‑war levels near $70. But the collapse of that ceasefire reignited supply fears and pushed prices sharply upward again.
With both sides now signalling a temporary pause, markets are cautiously optimistic though analysts warn that any renewed instability in the region could send prices soaring once more.
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