What happened
Oil prices plunged more than 9% on Monday, with Brent crude dipping below $88 a barrel, as the US and Iran paused attacks for a second night to allow room for negotiations. The sharp decline reverses last week's spike above $100, which had been driven by fears over supply disruptions from the conflict.
Why it matters for the market
The US ambassador to the UN confirmed the halt in attacks on Iran, stating it gives talks some space. Iran also said it had stopped retaliatory strikes in the region. The developments raise hopes for a resolution to the conflict that has disrupted global energy markets.
The war had effectively closed the Strait of Hormuz, a key shipping route for about 20% of the world's oil and LNG. A June memorandum of understanding had reopened the strait and pushed oil back to pre-war levels around $70, but the ceasefire collapsed earlier this month, reigniting supply fears.
Additional pressure came from Houthi militia attacks on oil tankers in the Red Sea, threatening an alternative export route for Saudi Arabia. Despite the sharp fall, analysts remain cautious. Susannah Streeter of Wealth Club noted significant uncertainty remains in prices and wariness about whether negotiations will lead to a lasting breakthrough.
What traders should watch
The conflict and its impact on oil have raised fuel costs globally, with knock-on effects on inflation and food prices. Markets are now watching closely for signs of a sustained de-escalation.
0
0
0
0