Oil prices fall below $90 after US pauses strikes on Iran, markets steady

Oil prices tumble

Brent crude, the global benchmark, fell as much as 7% in early Asian trading on Monday, briefly dipping below $90 a barrel. By mid-morning it was around $92–93, still down more than 5% from the end of last week. West Texas Intermediate dropped 5.4% to $84.45. The slide came after two consecutive nights without new US strikes on Iran, breaking a 13-night streak of attacks that had pushed Brent above $100 on Thursday. The earlier run-up had been sharp: Brent crossed the $100 mark as the Iran conflict expanded to the Red Sea, with Houthi attacks on Saudi infrastructure adding to supply fears.

“Bottom line, it looks like developments in the Middle East have turned positive over the weekend.”

Pause in hostilities

The US military reported no new strikes over the weekend, and Iran's armed forces said they would also halt attacks as long as the US did the same. Tehran described its operations as retaliation for American strikes. President Trump said Washington was in talks with Tehran, which was becoming "more serious by the day." The US campaign against Iran began in late February; the run of strikes that has now paused lasted 13 consecutive nights and targeted Iranian military sites. Iran's conditional ceasefire announcement on Sunday was the first clear signal of de-escalation since the conflict erupted. Still, Iran-backed Houthis in Yemen continued to target Saudi oil facilities on the Red Sea coast, and the Strait of Hormuz, a critical chokepoint for oil and gas shipments, remained largely blocked and contested.

Market reactions

Asian equity markets diverged. Seoul's Kospi opened sharply higher but turned lower on heavy foreign selling and ended down more than 1%, with Samsung Electronics and SK Hynix declining as funds rotated into Chinese memory maker CXMT, whose Shanghai debut surged around 500%. Japan's Nikkei 225 was little changed in early trade, Hong Kong's Hang Seng rose 0.3% and mainland China's CSI 300 slipped 0.5% in the morning session. European and US futures pointed to gains, with the DAX indicated higher before the open. The earlier oil and gas price surge had pushed European government bond yields to multi-year highs, but that upward pressure began to fade by the end of last week.

Brent-5.58%

WTI-5.46%

Brent

-5.58 %

WTI

-5.46 %

Data from the article text

Central banks on watch

The European Central Bank left its deposit rate unchanged at 2.25% on Thursday, as expected. But the energy-driven inflation pressure is likely to force a rate increase in September, according to market observers. This week brings decisions from the Federal Reserve on Wednesday, followed by the Bank of England and Bank of Japan. No rate hikes are anticipated, but policymakers are expected to stress they are closely monitoring the inflationary impact of higher energy costs.