Oil prices fell by $4 a barrel on Monday following U.S. President Donald Trump’s decision to refrain from launching a new offensive against Iran, as he aims for a swift agreement that would curb Tehran’s nuclear aspirations and restore access to the Strait of Hormuz. Brent crude futures decreased by $4.08, representing a decline of 4.64%, settling at $83.85 by 2352. Meanwhile, U.S. West Texas Intermediate crude was priced at $80.66 per barrel, down $4.01, or 4.74%. Both contracts experienced an increase exceeding 20% last month following the resurgence of hostilities between the U.S. and Iran, coupled with heightened security concerns stemming from attacks on multiple tankers near Oman, which dissuaded shippers from entering the Gulf to load oil.
In a notable indication of de-escalation, Trump stated late on Saturday via his Truth Social platform that Iran and other Middle Eastern nations had requested time to finalise a deal that would result in “the Immediate, Complete and Total” reopening of the crucial strait and “an end to Iran’s nuclear threat”. The primary concern is whether this week will mirror the previous one, as expectations for a deal may falter with Iran maintaining its firm stance and utilising its influence over the Strait, possibly through an assault on a U.S. base or a tanker navigating the waterway, according to market analyst Tony Sycamore.
Over the weekend, two tankers carrying Saudi oil navigated through the Bab el-Mandeb Strait, departing from the Red Sea. In contrast, traffic in the Strait of Hormuz experienced a slowdown due to reports of attacks on vessels, as indicated by shipping data released on Monday. The United Kingdom Maritime Trade Operations has reported three additional tanker attacks since Saturday.
On Sunday, OPEC+ sanctioned an increase in oil production quotas by approximately 188,000 barrels per day starting in September, as announced by the producer group. This decision marks the conclusion of the gradual rollback of a series of voluntary output reductions. Export disruptions from the Gulf, along with the effects of the Iran and Ukraine wars on Russia and Kazakhstan, have rendered the successive monthly OPEC+ hikes throughout much of this year largely theoretical, with minimal influence on the market.