Oil Prices Drop 6pc as US-Iran Fighting Pauses

Tehran (GNP): Oil prices fell more than six percent on Monday after the United States and Iran paused military strikes over the weekend, ending two weeks of attacks between the two sides.

The pause has raised hopes of a diplomatic breakthrough that could ease the broader conflict and allow shipping to resume through the Strait of Hormuz.

Brent crude futures dropped $6.20, or 6.4 percent, to $90.58 a barrel by 0620 GMT. Prices briefly slipped below the closely watched $90 threshold earlier in the session.

US West Texas Intermediate crude fell $5.80, or 6.5 percent, to trade at $83.51 a barrel.

Both benchmarks are now at their lowest levels in nearly a week, following three consecutive weeks of gains.

Brent had climbed as high as $100 a barrel as the conflict disrupted oil shipments through the Strait of Hormuz and spread to the Red Sea, complicating exports from Saudi Arabia through the Bab el-Mandeb strait to Asian markets.

US Ambassador to the United Nations Mike Waltz said Sunday that President Donald Trump had opted to pause American strikes to give diplomatic efforts more room to succeed.

Analysts at ING said the drop in prices reflects the market’s eagerness for any sign of easing tensions, describing the pause as the first concrete indication of a possible de-escalation.

Despite the halt in fighting, shipping data from Kpler showed fewer than 10 commodity vessels passed through the Strait of Hormuz each day over the weekend.

MST Marquee analyst Saul Kavonic said any recovery in shipping traffic through the strait is likely to be slow, as many operators remain cautious about safety before committing more vessels to the route.

Traffic through the Bab el-Mandeb strait also declined Sunday after Yemen’s Houthi forces struck Saudi oil facilities along the Red Sea coast.

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Despite that attack, a third Chinese supertanker was able to exit through the strait during the same period.

Some analysts caution that prices could still firm up again if supply disruptions continue across the region.

Analysts at UOB noted that the conflict’s spread to the Red Sea, combined with Ukrainian drone strikes on Russian ships and refineries, could sustain disruptions that keep oil prices elevated and add upward pressure on global inflation.

Ukraine said it struck several Russian oil facilities over the weekend, adding another layer of uncertainty to global energy markets already shaped by the Middle East conflict.