London (TDI): Oil prices tumbled more than $4 a barrel on Monday after US President Donald Trump called off a fresh attack on Iran and sought a quick agreement aimed at reopening the strategically vital Strait of Hormuz.
Brent crude futures fell $4.49, or 5.11%, to $83.44 a barrel by 0408 GMT, while US West Texas Intermediate crude dropped $4.90, or 5.79%, to $79.77 a barrel.
Both benchmarks had surged by more than 20% last month as fighting between the United States and Iran resumed and attacks on tankers around Oman heightened security concerns, discouraging shipping companies from entering the Gulf to load oil.
In a sign of possible de-escalation, Trump said late Saturday that Iran and other Middle Eastern countries had asked for more time to reach a deal that would lead to the “Immediate, Complete and Total” reopening of the Strait of Hormuz and address what he described as Iran’s nuclear threat.
However, uncertainty remains over whether the latest diplomatic push will succeed. Shipping data showed two tankers carrying Saudi oil crossed the Bab el-Mandeb Strait from the Red Sea over the weekend, while traffic through the Strait of Hormuz slowed following reports of attacks on vessels.
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The United Kingdom Maritime Trade Operations has reported three additional tanker attacks since Saturday, adding to concerns over the security of crucial maritime routes.
The oil market also received some support from an OPEC+ decision on Sunday to increase its oil production quota by around 188,000 barrels per day from September. The move completes the unwinding of another layer of voluntary production cuts.
Read More: Oil Climbs Nearly 4% on Escalating US-Iran Conflict
However, successive OPEC+ production increases this year have had limited impact on global markets because export disruptions linked to the Iran and Ukraine wars have affected supplies from the Gulf, Russia and Kazakhstan.
The Strait of Hormuz remains a critical chokepoint for global energy supplies, meaning any sustained disruption could continue to exert significant pressure on oil prices, shipping costs and the wider global economy.
