- Brent crude dropped by about 1.45% to $110.48 a barrel after US President Trump said he had postponed a planned strike on Iran. West Texas Intermediate also fell, but analysts warn prices could quickly rebound.
- Despite the pause, the Strait of Hormuz closure continues to block roughly 20% of global oil and LNG supply. The US has tapped its strategic reserve, drawing 9.9Â million barrels last week.
- Traders say any news – from resumed attacks to diplomatic breakthroughs – could prompt violent price swings.
Oil prices edged lower on Monday after US President Trump said he would pause a widely anticipated strike on Iran to allow for negotiation.
Brent crude fell by $1.62 to $110.48 a barrel, while US benchmark West Texas Intermediate slipped to around $103. Traders had been bracing for a further escalation in the conflict, which began in February when Iranian drones attacked US and Israeli assets.
Analysts at several banks said the decision to delay retaliatory strikes eased immediate fears of supply disruptions and prompted profit taking.
But the reprieve may be fleeting. The Strait of Hormuz remains closed after Iranian forces mined and blockaded the channel last week. About one fifth of global oil and LNG supply normally transits the strait, making it a critical artery for Middle Eastern exports.
With exports from the region stalled, crude supplies have tightened globally. US authorities responded by tapping the Strategic Petroleum Reserve, releasing 9.9 million barrels last week and leaving inventories at their lowest level since July 2024.
The release offered only a temporary cushion; further withdrawals could become politically contentious in an election year.
Market participants warn that volatility is here to stay. The path of prices will hinge on diplomacy, military action and the pace at which alternative routes like the Trans‑Arabian Pipeline can ramp up. If hostilities resume, Brent could surge well beyond $120.
Conversely, a breakthrough agreement could see prices briefly test $100, though structural undersupply would likely limit declines.
Outlook uncertain
The price swings have real‑world consequences: US gasoline averages $4.52 per gallon, prompting many Americans to reduce their driving habits, and UK pump prices have climbed towards £1.60 per litre. Industries such as aviation and freight must now decide whether to lock in fuel purchases at today’s relatively lower prices or gamble on further dips.
From a transition perspective, the episode underscores the fragility of fossil fuel supply chains. The closure of a single waterway has reverberated across global markets and forced governments to deploy strategic reserves.
Critics say such volatility illustrates the urgency of reducing dependence on oil by scaling electrification and renewable fuels. Others argue that until alternative infrastructure is fully built, flexible oil and gas supplies remain indispensable for economic stability. The world will continue to watch Hormuz – and Washington – for direction.
