Global oil prices declined sharply on Monday after United States President Donald Trump announced the resumption of negotiations with Iran aimed at ending the ongoing conflict in the Middle East and reopening the Strait of Hormuz.
Brent crude, the international benchmark for oil prices, fell by 4.69 per cent to $83.81 per barrel in early Asian trading, while West Texas Intermediate crude dropped by 4.67 per cent to $80.72 per barrel.
The decline came after Trump disclosed that a new round of discussions with Iran would commence on Monday following Washington’s decision to suspend plans for major military strikes against the Islamic Republic.
“Now what we’re doing is we’re talking to them in the form of a negotiation. It begins tomorrow afternoon,” Trump told reporters, without revealing the location of the talks or the identities of those expected to participate.
The conflict, which erupted in late February after the United States and Israel launched attacks on Iran, has significantly disrupted global energy markets and heightened concerns about oil supplies.
Tensions intensified after the effective closure of the Strait of Hormuz, one of the world’s most strategically important maritime routes for crude oil and natural gas exports.
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Iranian authorities also indicated that an agreement involving Oman was close to being reached to establish an alternative route for the movement of vessels through the region.
The latest developments have raised hopes among investors that a diplomatic breakthrough could ease tensions, stabilise global energy markets and restore the flow of oil shipments through the vital waterway.
Analysts, however, cautioned that oil prices could remain volatile until a formal agreement is reached and the security situation in the region improves.