On Monday, global oil prices crashed by more than 7% after Washington and Tehran suspended mutual attacks that had been ongoing for two weeks. This has strengthened expectations that the sides may be able to find a diplomatic solution to the conflict, which would restore safe shipping through the Strait of Hormuz—a key route for transporting oil. Brent futures fell to $89.58 per barrel, while US WTI dropped to $82.87.
The price surge came after a three-week rally, during which Brent reached the $100 mark due to disruptions in the Red Sea that affected Saudi Arabia’s exports to Asia. The US ambassador to the United Nations, Mike Waltz, said President Trump decided to temporarily halt the strikes to give diplomacy a chance. In his view, it was a pause rather than a complete cessation, but the market took the de-escalation signal positively.
Market analyst Tony Sycamore of IG Markets noted that confidence is growing that a diplomatic track is feasible. In his opinion, a return to the 14-point memorandum of understanding and clear agreements on control of the Strait of Hormuz could provide a good foundation. However, data from Kepler shows that even after the attacks through the strait stopped, fewer than ten ships carrying cargo pass through it each day—normal operations of the channel have not yet been restored.
Full version: Oil dives 7% after US and Iranian attacks are halted