Crude oil prices dropped nearly 5% on Monday following a pause in military strikes between the United States and Iran, easing tensions after two weeks of conflict. Brent crude futures fell $4.89, or 5.05%, to $91.89 a barrel, briefly dipping below the $90 support level, while US West Texas Intermediate crude declined $4.67, or 5.23%, to $84.64 a barrel, according to livemint.com.
The pause in hostilities over the weekend raised hopes for a diplomatic resolution that could restore the flow of oil shipments through the Strait of Hormuz, a critical chokepoint for global oil trade. This development led to a swift market reaction, with Brent futures dropping sharply in early Asian trading. However, the region remains volatile, and the Strait of Hormuz is still contested, keeping uncertainty in the market, as reported by livemint.com.
The decline in crude prices reflects market adaptability rather than optimism for a lasting peace, according to analysis by Clyde Russell. While the temporary ceasefire eased immediate fears, the ongoing Iran-US conflict continues to create instability in physical oil markets and refined product supplies. Brent crude’s fall to near $92 marks a significant shift from the heightened prices seen during the peak of hostilities, highlighting the sensitivity of oil markets to geopolitical developments, per livemint.com.
Brent crude futures closed at $91.89 per barrel on Monday, marking the largest single-day drop since the conflict began. Market participants will closely monitor developments in the Strait of Hormuz and any further diplomatic efforts between the US and Iran that could influence oil supply and prices in the near term, according to livemint.com.