Oil Prices Fall Sharply After Trump Cancels Planned Strikes on Iran

Oil prices dropped more than $4 a barrel on Monday as markets reacted to President Donald Trump’s decision to cancel planned military strikes against Iran and pursue a potential agreement that would reopen the Strait of Hormuz.

Brent crude, the international benchmark, declined by roughly 5 percent or more in early trading, with prices falling about $4.65 to around $83.28 a barrel at one point. West Texas Intermediate crude, the U.S. benchmark, dropped approximately 6 percent, or about $5.20, to near $79.47. Intraday moves were even steeper in some sessions, with Brent briefly sliding more than 7 percent before recovering a portion of the losses.

The sell-off reversed a strong rally that had pushed both benchmarks higher by more than 20 percent in July. That surge was driven by renewed fighting between the United States and Iran, attacks on tankers near Oman, and persistent disruption to shipping through the Strait of Hormuz, a waterway that normally carries about one-fifth of the world’s oil supply. Traffic through the strait has remained far below pre-conflict levels, with only a fraction of the usual daily vessel transits recorded over the weekend.

Trump announced late Saturday that he was holding off on new attacks after Iran and other Middle Eastern countries requested time to complete a deal. He said the parameters under discussion included the “Immediate, Complete, and Total” reopening of the Strait of Hormuz and an end to Iran’s nuclear threat. The president indicated that Israel shared the commitment to pause while negotiations proceeded and urged rapid progress.

Market participants interpreted the announcement as a reduction in the immediate risk of further military escalation that could tighten oil supplies. Analysts noted that the drop largely reflected an easing of the geopolitical risk premium that had been priced into crude during the July rally. At the same time, OPEC+ approved a modest production increase of approximately 188,000 barrels per day for September, completing the unwinding of an earlier layer of voluntary cuts. The output decision added mild additional downward pressure, though actual supply remains constrained by regional security issues.

Shipping data continued to show limited activity in the Gulf, and reports of further tanker incidents underscored that risks have not disappeared. Iranian officials indicated discussions with Oman regarding arrangements for the strait were advancing, though details on full reopening remained unconfirmed. European natural gas prices also declined in early trading as energy markets broadly adjusted to the shift in tone.Oil had climbed as high as near $100 a barrel at points during the recent escalation before the latest retreat brought prices to their lowest levels in several weeks. Traders and analysts cautioned that any breakdown in talks or renewed military activity could quickly reverse the decline. For now, the combination of the strike cancellation and hopes for restored shipping access through Hormuz has provided the clearest downward catalyst for crude markets since the conflict intensified.