NEW DELHI: Crude oil prices tumbled nearly 5% on Monday following a pause in military actions between the United States and Iran after 14 days of strikes. The halt in operations has sparked hopes of a diplomatic resolution, potentially easing regional tensions and facilitating smoother oil shipments through the critical Strait of Hormuz.
Brent crude futures dropped by $4.89, or 5.05%, to trade at $91.89 per barrel, briefly dipping below the crucial $90 support level earlier in the session. Meanwhile, US West Texas Intermediate (WTI) crude fell $4.67, or 5.23%, to $84.64 per barrel.
Oil Under Pressure After Three Weeks of Gains
Crude prices remained under pressure, with both Brent and WTI trading near one-week lows following three consecutive weeks of gains.
The decline comes as the US refrained from conducting fresh strikes on Iran since late Friday, following 13 days of military action, leaving uncertainty around President Donald Trump’s next steps. Concurrently, the Iranian military stated that it has halted its retaliatory operations.
Despite the relative calm, market geopolitical risk remains elevated. Yemen’s Iran-backed Houthi rebels claimed responsibility for targeting Saudi Aramco-linked facilities in the Red Sea port cities of Jizan and Yanbu on Saturday. However, neither Saudi authorities nor Aramco have confirmed these reported attacks.
Supply Disruptions Keep Inflation Fears Alive
Despite Monday’s drop, Brent crude remains up over 25% this month as the US-Iran conflict expanded beyond the Strait of Hormuz into the Red Sea. Houthi threats to blockade Saudi ports have heightened global supply concerns, while the prolonged conflict has raised fears of shrinking inventories and rising fuel-driven inflation.
Over the weekend, Saudi Arabia briefly issued emergency alerts for two provinces before rescinding them. Yanbu, the western terminal of the Kingdom’s East-West pipeline, has emerged as a key crude export hub amid disruptions in the Strait of Hormuz, while Jizan houses a major Aramco refinery and export terminal.
Significant differences persist between Washington and Tehran regarding Iran’s nuclear program and the future of the Strait of Hormuz, dampening prospects for a swift resolution.
Elsewhere, supply concerns flared as Russia’s largest Black Sea oil export terminal at Novorossiysk halted loadings for several days following an increase in Ukrainian drone attacks, according to a Bloomberg report.
Global policymakers are closely monitoring the recent surge in energy prices and its broader impact on economic growth, inflation, and consumer spending. Investors are particularly focused on the US Federal Reserve’s policy meeting on July 28–29 for signals regarding the future interest rate outlook.
