Global oil prices experienced a sharp decline on Monday, sliding more than 6% as the United States and Iran paused military strikes over the weekend, signaling a potential de-escalation in Middle East tensions.
Data shows that during the trading session, Brent crude futures fell by $6.20 to $90.58 per barrel, a drop of 6.4%, and briefly dipped below the $90 mark. Meanwhile, West Texas Intermediate (WTI) crude futures on the New York Mercantile Exchange dropped $5.80 to $83.51 per barrel, a decline of 6.5%. Both benchmark crude oil prices hit their lowest levels in nearly a week, ending a three-week streak of gains.
The recent surge in oil prices had been driven by escalating conflict in the Middle East, which disrupted shipping through the Strait of Hormuz and the Bab el-Mandeb Strait, pushing Brent crude above $100 per barrel at one point. Market analysts attribute the current price correction primarily to the emergence of diplomatic room for maneuver in the US-Iran conflict. After two weeks of sustained confrontation, both sides paused military operations over the weekend.
United States Ambassador to the United Nations Mike Waltz stated in media interviews that President Trump had decided to suspend US military strikes to allow more time for diplomatic efforts. Financial institutions, including ING, noted that the pause in further military action provides a tangible signal of de-escalation, with market expectations of reduced geopolitical risk quickly reflected in oil prices.
However, the actual recovery of key maritime chokepoints in the Middle East remains slow. Data from shipping monitoring firm Kpler indicates that fewer than 10 commercial vessels per day transited the Strait of Hormuz over the weekend. Shipping market analysts emphasize that the shipping industry remains cautious due to security concerns, and the restoration of traffic flow through the Strait of Hormuz will be a prolonged and gradual process.
Additionally, attacks on Red Sea oil facilities by Houthi rebels in Yemen have reduced the number of vessels passing through the Bab el-Mandeb Strait. Several institutions also point out that the structural risks to the global energy supply chain have not been fully eliminated. Beyond the Middle East, strikes on energy infrastructure in the Russia-Ukraine conflict continue to disrupt the market.
If sustained disruptions to key global shipping lanes and crude oil supplies occur, international oil prices could face renewed upward pressure, potentially adding to global inflation concerns.
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