Global Oil Prices Drop on Hopes of Diplomatic Breakthrough Between US and Iran

Reuters

Oil prices.

Global oil prices fell sharply on Monday after the United States paused military strikes on Iran, raising hopes that the conflict could move towards a diplomatic resolution and reducing concerns over disruptions to crude supplies from the Middle East.

Brent crude futures fell by more than 5% to around $91.20 a barrel, while US West Texas Intermediate (WTI) crude dropped to about $84.40 a barrel, extending losses after a weekend of de-escalation in hostilities.

The decline follows two weeks of strong gains, during which oil prices surged on fears that fighting between the United States and Iran could disrupt shipping through the Strait of Hormuz, a vital route for around a fifth of the world's oil trade. Brent had climbed to around $100 a barrel at the height of those concerns.

Investor sentiment improved after Washington suspended its military operations, while Iran reportedly agreed to halt retaliatory attacks as diplomatic efforts gathered pace. The prospect of reduced tensions eased concerns over supply shortages, prompting traders to unwind risk premiums that had pushed prices higher.


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