Oil prices fell Monday, slipping from last week’s surge as reports emerged that Iran is seeking a truce with Israel. The news eased concerns about a major supply disruption in the Middle East. Brent crude settled at $73.23 a barrel, down $1.00 or 1.35%, while U.S. West Texas Intermediate crude closed at $71.77, down $1.21 or 1.66%.
Iran reportedly asked Qatar, Saudi Arabia, and Oman to urge U.S. President Donald Trump to push Israel toward a ceasefire, offering flexibility in nuclear talks in return. This potential diplomatic breakthrough led traders to unwind bets on a broader regional conflict threatening oil flows.
Friday’s sharp 7% price spike, driven by Israel’s strikes on Iranian military targets, had pushed crude into technically overbought territory. Analysts, including Rory Johnston of Commodity Context, said the rally was fueled by speculative inflows, leaving the market vulnerable to quick reversals like Monday’s.
Despite the hostilities, critical infrastructure such as Iran’s Kharg Island export terminal remains untouched. Mizuho’s Robert Yawger warned that any damage there could send prices toward $90 a barrel. For now, flows through the vital Strait of Hormuz—transiting 18 to 19 million barrels per day—have not been disrupted, though electronic interference has reportedly increased in the area.
OPEC+ spare capacity, roughly matching Iran’s 3.3 million bpd output, may provide a buffer if disruptions do occur.