Oil prices sink over 5% after Trump calls off Iran strike, says Strait of Hormuz deal is near
Crude prices tumbled on Monday after Donald Trump called off a threatened attack on Iran and said negotiations would begin, easing fears of a wider disruption to Persian Gulf oil shipments.
Diplomatic about-face
President Donald Trump announced on Saturday that he was halting a planned attack on Iran, conditioning the move on a swift agreement. Speaking to reporters aboard Air Force One on Sunday, he said Saudi Arabia, the United Arab Emirates, Qatar and Iran had asked him to call off the strike.
Everything was ready to go, (…) it would have been a powerful attack.
Trump added that there is an agreement on the Strait of Hormuz and that a deal on the denuclearisation of Iran would follow. He set no deadline, saying the US could act whenever it wanted. Iranian state media denied that Tehran had requested the attack be called off. Trump said negotiations would begin on Monday.
- Trump announces halting attack on Iran, conditional on quick agreement
- Trump says Saudi Arabia, UAE, Qatar and Iran asked him to halt; negotiations to start Monday
- Oil prices drop sharply: Brent -5.33%, WTI -6.17%
Oil prices tumble
Brent crude for September delivery fell 5.33% to $83.24 a barrel on ICE on Monday morning, while West Texas Intermediate dropped 6.17% to $79.45 on NYMEX. The declines unwound part of a nearly 25% surge in July, the strongest monthly gain since March 2026, which had been fuelled by renewed hostilities between the US and Iran and attacks on tankers near Oman.
- Brent crude
- -5.33 %
- WTI crude
- -6.17 %
Strait of Hormuz bottleneck
During the conflict Iran has largely closed the Strait of Hormuz, through which about 20% of global oil and LNG supplies transited before the war. The restriction sent energy prices soaring. Trump has argued that higher fuel costs are a short-term price to prevent Iran from obtaining nuclear weapons, but rising energy bills are increasing political pressure to end the conflict. IG analyst Tony Sycamore told Reuters that markets fear a scenario in which peace talks collapse again and Iran continues to use its control over the strait as leverage, including through attacks on tankers or US military targets.
OPEC+ adds supply, but disruptions persist
OPEC+ countries have decided to raise output limits by about 188,000 barrels per day from September. However, Reuters noted that disruptions to exports from the Persian Gulf and the effects of the war in Ukraine mean earlier production increases have had only a limited impact on actual supply and the global market balance.
Relief, not a trend change
Analysts described the price drop as a relief move rather than the start of a sustained decline. Takahiro Asaoka, commodity market analyst at Itochu Research Institute, said the sell-off was largely technical.
The price declines are an expression of relief that further escalation has been avoided.
He added that the move appeared to be driven by short-covering as the geopolitical risk premium decreased, and that a lasting fall in oil prices would be difficult unless an agreement is reached that allows the Strait of Hormuz to reopen fully.
