Global oil prices fell sharply on Monday after signs of easing tensions between the United States and Iran raised hopes of renewed diplomatic engagement and a possible reopening of the Strait of Hormuz, a critical route for global energy supplies.
Brent crude dropped 5.2 percent to around $92 per barrel, while U.S. West Texas Intermediate (WTI) crude declined 5.4 percent to $84.45, reversing some of the sharp gains recorded during recent hostilities in the Middle East.
The decline followed reports that Washington had suspended further military strikes after nearly two weeks of attacks on Iranian targets. U.S. President Donald Trump’s envoy to the United Nations said the administration was allowing diplomatic efforts room to progress.
Iran also announced it would halt retaliatory attacks against neighboring countries, offering temporary relief to Gulf shipping operators and the global oil market.
The latest development comes after weeks of heightened tensions that disrupted maritime traffic. Fighting escalated when Iran targeted vessels transiting the Strait of Hormuz, prompting renewed military exchanges with the United States and threatening one of the world’s busiest oil shipping routes.
The conflict later spread beyond the Gulf, with Iran-backed Houthi rebels in Yemen launching attacks on Saudi-linked vessels in the Bab al-Mandeb Strait, another strategic gateway connecting the Red Sea to international trade routes.
Those developments had pushed Brent crude above $100 per barrel last week for the first time since May, fueled by fears of supply disruptions. However, reports that shipping activity continued in the Red Sea, coupled with Washington’s decision to refrain from additional strikes, helped ease market concerns.
Iranian authorities also disclosed progress in discussions with Oman over the future management of the Strait of Hormuz. According to Foreign Ministry spokesman Esmaeil Baqaei, the talks focused on establishing common operational mechanisms to guarantee safe navigation while respecting the sovereignty of both countries.
Separately, reports indicated Pakistan is exploring efforts to revive U.S.-Iran peace negotiations following diplomatic initiatives reportedly encouraged by China.
The improved geopolitical outlook weighed heavily on crude prices, with Brent briefly plunging below the $90-per-barrel mark during Monday’s trading session.
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Analysts said the retreat reflected growing confidence that both sides may be seeking to avoid further escalation.
National Australia Bank’s Sally Auld noted that recent developments had strengthened the belief that oil prices above $100 per barrel may encourage restraint from both Washington and Tehran.
The easing tensions also boosted investor sentiment across global financial markets by reducing fears of renewed inflationary pressures and additional interest rate increases.
Asian stock markets posted mixed performances. Tokyo, Hong Kong, Shanghai, Sydney, Wellington and Manila traded higher, while Seoul, Taipei and Singapore recorded losses as technology stocks remained under pressure over concerns about heavy artificial intelligence spending.
Investors are now awaiting earnings reports from major technology firms, including Microsoft, Meta, Apple and Amazon, for further signals on corporate investment plans, particularly in AI.
Attention is also turning to this week’s U.S. Federal Reserve policy meeting. Although expectations for additional tightening have risen following recent geopolitical developments, most analysts believe policymakers will leave interest rates unchanged while monitoring inflation trends and global risks.
Meanwhile, China’s leading memory chipmaker, CXMT, surged about 470 percent during its Shanghai stock market debut after raising $9.8 billion in what has been described as the country’s largest mainland technology initial public offering.