Global oil prices tumbled over 6% on Monday, with Brent crude falling below $90 a barrel, after the United States and Iran paused their military strikes over the weekend. The halt followed thirteen consecutive nights of attacks, offering the first tangible signal of potential de-escalation in the Persian Gulf.
Market Relief and the Weekend Stoppage in the Persian Gulf
International benchmark Brent crude oil sank to below $90 a barrel Monday morning, while U.S. West Texas Intermediate crude dropped to around $83 a barrel, both down around 7%. Brent crude futures fell $6.20, or 6.4%, to $90.58 by 0620 GMT after briefly slipping under the key support level of $90 earlier in the session. US West Texas Intermediate crude was at $83.51 a barrel, down $5.80, or 6.5%. The sudden downward correction comes after the United States and Iran refrained from launching military strikes in the Persian Gulf for a second straight day, with both contracts trading at their lowest levels in nearly a week after rising for the past three weeks.
The two sides halted fire over the weekend, stepping back from a volatile escalation following 13 consecutive nights of attacks that shattered their deal to end the war and threatened new pain for the global economy. U.S. Ambassador to the United Nations Mike Waltz told Fox News Sunday
and other US media that President Donald Trump had decided to pause US attacks to allow more time for diplomacy. Waltz told NBC News’ “Meet the Press” on Sunday that the decision to halt strikes came in response to ongoing talks between the two sides, stating, What the president is doing right now, as we’ve seen all along, is giving some talks some space,
adding that talks were “ongoing,” but that there was internal fighting
on the Iranian side, while also dismissing reporting that U.S. weapons stockpiles are depleted.
"Oil prices fell sharply in early trading as the US and Iran refrained from further military action, offering the first tangible signs of a potential de-escalation in tensions," ING analysts said in a client note, adding that "The price action in oil this morning clearly reflects the market’s desperation for positive news."
Brent had reached $100 per barrel as the conflict, which reduced oil shipments via the Strait of Hormuz, spilled over to the Red Sea, hindering exports from the world’s top exporter, Saudi Arabia, via the Bab el-Mandeb strait to Asia. President Donald Trump said Thursday that he was considering a “massive attack” to try and break Iran’s grip on the strait, but since then the U.S. and Iran have refrained from attacks for three days. Additionally, Jordan, a key U.S. ally, said it downed two drones early Monday, though it was not clear who launched them.
Shipping Chokepoints Remain Restricted Despite the Pause
Despite the military pause, commercial transit through critical maritime trade routes remains severely constrained. Shipping data from Kpler showed that fewer than 10 commodity vessels passed through the Strait of Hormuz daily during the weekend. Meanwhile, a third Chinese supertanker exited via the Bab el-Mandeb strait, though ship traffic through the strait fell on Sunday after Yemeni Houthis attacked Saudi oil installations along the Red Sea coast, with Yemen’s Iran-aligned Houthis saying Saturday they carried out operations targeting Saudi Aramco facilities.
Iranian Foreign Ministry spokesman Esmaeil Baghaei maintained at a Monday news conference that the Strait of Hormuz was "closed." Baghaei stated that "Mediators may convey messages from the American side to us concerning regional developments, but at the present time we have no negotiations with the American side," and asserted that Tehran would "never allow America to determine the timing of war and peace" and would "continue to defend ourselves for as long as our interests and considerations require." However, Baghaei also added that "whenever we feel that we can use diplomacy as a tool to safeguard our national interests, we will certainly use it as an instrument."
Shipping experts emphasize that reopening these corridors will require more than a temporary cessation of airstrikes. MST Marquee analyst Saul Kavonic pointed out that "Any rebound in flows through the Strait of Hormuz is likely to prove slow and partial, as many shippers remain wary and will want greater confidence in their safety before they bring more empty ships into the Strait."
Broader Geopolitical Pressures and Ongoing Market Uncertainty
Beyond the Persian Gulf and the Red Sea, simultaneous conflicts continue to cast a shadow over global energy supplies as Ukraine said it hit several Russian oil sites over the weekend. UOB analysts noted in a market update that "As the Middle East conflict widened to the Red Sea and Ukrainian drones struck Russian ships and refineries … Sustained (supply) disruption would likely keep oil prices elevated and continue to pose upside risks to global inflation."
