LONDON: Global oil prices fell sharply on Monday, with Brent crude dropping by nearly $4 a barrel as signs emerged of a possible de-escalation between the United States and Iran.
Brent crude futures declined by $4.08, or 4.64 percent, to $83.50 a barrel, while US West Texas Intermediate (WTI) crude fell $4.01, or 4.74 percent, to $79.70 a barrel.
The decline followed US President Donald Trump’s indication that Washington would hold off on immediate military action against Iran and pursue negotiations aimed at resolving the nuclear dispute.
Oil prices had risen by more than 20 percent last month amid heightened US-Iran tensions, attacks on oil tankers near Oman and growing security concerns around the Strait of Hormuz.
Trump said on Saturday that Iran and other countries in the Middle East had sought additional time to finalise an agreement that could lead to the reopening of the Strait of Hormuz and help address concerns surrounding Iran’s nuclear programme.
Market analysts are closely watching developments in the expected talks this week. Tony Sycamore said investors remain focused on whether negotiations will make meaningful progress or whether Iran will maintain pressure around the Strait of Hormuz, potentially triggering renewed regional tensions.
Meanwhile, two tankers carrying Saudi crude reportedly passed through the Bab el-Mandeb Strait over the weekend, while shipping traffic through the Strait of Hormuz remained slow. The UK Maritime Trade Operations authority has also reported further incidents involving three tankers since Saturday.
In another development, OPEC+ has approved an increase of around 188,000 barrels per day in oil production from September. However, analysts expect the immediate impact on global supplies to remain limited due to disruptions affecting exports from the Gulf region, Russia and Kazakhstan.
The latest fall in oil prices reflects growing market optimism over a possible easing of US-Iran tensions, although continued uncertainty around the Strait of Hormuz means prices could remain highly sensitive to developments in the region.
