Oil prices declined sharply on Monday, posting their largest daily losses in weeks after the United States paused its air campaign against Iran, raising hopes that renewed diplomatic efforts could eventually ease tensions and restore energy shipments through the Strait of Hormuz. Despite the pullback, uncertainty remained elevated as physical oil flows through the region continued to operate well below pre-conflict levels.
Brent crude settled at $88.36 per barrel, down 8.7%, while West Texas Intermediate (WTI) fell 7.5% to $82.61 per barrel, with both benchmarks closing at their lowest levels in more than a week. The decline followed last week’s rally above $100 per barrel, which had been fueled by escalating military conflict and severe disruptions to Middle East shipping routes.
Markets reacted positively to signs of renewed diplomacy after the United States suspended additional strikes against Iran, although officials indicated military action remained possible if negotiations fail. At the same time, attacks on Saudi energy infrastructure and continued threats to shipping from Yemen’s Houthi forces highlighted that risks to global oil supplies remain unresolved.
Shipping activity through the Strait of Hormuz remained significantly below normal levels, while traffic through the Bab el-Mandeb Strait also remained disrupted. Analysts noted that although hopes for diplomacy weighed on prices, the underlying supply situation has changed little, with constrained exports, longer shipping routes, and ongoing geopolitical uncertainty likely to keep oil markets volatile in the near term.