Oil prices fell sharply on Monday after US President Donald Trump said Washington and Tehran had held “very good and productive conversations”, raising expectations of a possible de-escalation in the ongoing Iran war.
In a social media post on Monday, Trump said he had instructed the Department of War to postpone planned military strikes on Iranian power plants and energy infrastructure for five days, contingent on the success of continued talks this week. The move marks a notable shift from recent threats to target Iranian energy assets amid escalating tensions around the Strait of Hormuz.
The conflict, now in its fourth week, has severely disrupted global energy markets. Iran’s actions in and around the Strait — a critical chokepoint that typically handles about 20% of global oil flows — had driven crude prices above $110 per barrel earlier this month and triggered widespread volatility.
However, the latest diplomatic signals have eased immediate supply concerns. Brent crude dropped back below $100 per barrel shortly after Trump’s announcement, while US benchmark WTI also declined, reflecting reduced geopolitical risk premiums.
Markets interpreted the delay in strikes as lowering the probability of further damage to Middle Eastern energy infrastructure — a key factor that had previously pushed prices higher. Analysts noted that even a temporary pause can significantly impact pricing, as oil markets are highly sensitive to supply disruption risks rather than actual losses.
Despite the pullback, prices remain elevated compared to pre-war levels, underscoring ongoing uncertainty. Earlier escalations — including attacks on shipping and threats to energy facilities — had already tightened supply expectations and raised concerns over inflation and global economic stability.
The direction of oil markets in the coming days will hinge on whether US-Iran talks translate into a sustained easing of hostilities, or if tensions flare up again once the five-day window expires.
