Global oil prices fell sharply by 5 percent in early Asian trading on Monday after the United States and Iran suspended military attacks, easing fears of an immediate disruption to Middle East crude supplies.
Brent crude was trading at $92.04 per barrel, down 5.15 percent, while U.S. benchmark West Texas Intermediate (WTI) dropped 5.39 percent to $84.76 per barrel.
The decline followed two weeks of conflict that had pushed Brent crude above $100 per barrel. Traders locked in profits after prices surged nearly 20 percent over the past fortnight on concerns that the fighting could disrupt supplies through the Strait of Hormuz and the Red Sea.
The United States announced on Friday that it was temporarily suspending its bombing campaign against Iran. U.S. Ambassador to the United Nations, Mike Waltz, said the pause was intended to “give diplomacy some space,” while noting that additional American military assets were being deployed to the region in case negotiations fail.
Iran also signalled it would halt attacks as long as the United States refrains from military action. Foreign Ministry spokesperson Esmaeil Baghaei described recent talks with an Omani delegation as “constructive.”
An Iranian official, speaking anonymously, said Tehran’s approach remained “attack for attack,” indicating that its restraint would depend on continued U.S. restraint.
Despite the easing of tensions, analysts cautioned that the price drop may prove temporary unless tanker traffic through the region recovers significantly. Shipping companies remain cautious after freight rates soared during the conflict, with elevated security risks still a concern.
Market observers also pointed to other factors behind Washington’s decision to pause operations, including the depletion of initial military targets, heavy use of munitions and missile interceptors, and growing domestic political pressure ahead of the U.S. midterm elections. With the national average price of gasoline remaining above $4 per gallon, higher fuel costs have become a sensitive political issue.
Analysts expect oil markets to remain highly volatile in the coming days as traders closely monitor diplomatic developments between Washington and Tehran.