Oil prices fell sharply on Monday after the United States and Iran halted hostilities over the weekend, raising hopes that a diplomatic breakthrough could ease tensions in the Middle East. However, shipping through the region's two critical maritime chokepoints – the Strait of Hormuz and the Bab al-Mandeb Strait – remains severely disrupted, keeping concerns over global energy supplies alive.
Brent crude futures dropped $4.43, or 4.29%, to $92.49 a barrel by Monday morning trading. US West Texas Intermediate (WTI) crude fell $4.20, or 4.7%, to $85.11 a barrel.
The decline followed the suspension of nearly two weeks of intense military exchanges between Washington and Tehran.
The United States halted its bombing campaign late on Friday after 13 consecutive nights of airstrikes, with no fresh attacks reported over the weekend. Iran also refrained from launching retaliatory strikes for a second straight day, signalling a temporary de-escalation.
US Ambassador to the United Nations Mike Waltz said President Donald Trump was giving diplomatic efforts "some space" after negotiations gathered momentum in recent days. A senior Iranian official also told Reuters that Tehran would suspend its attacks as long as the United States maintained its pause.
The temporary truce comes after reports that President Trump's advisers recommended suspending the air campaign, citing a dwindling list of military targets and concerns over the depletion of US weapons stockpiles.
Despite the easing of military tensions, maritime traffic through the Gulf has yet to recover.
The Strait of Hormuz, through which around one-fifth of the world's oil supply passes, continues to experience sharply reduced vessel movements. According to shipping intelligence firm Kpler, fewer than 10 commodity vessels transited the strategic waterway each day over the weekend. Only seven vessels passed through on Sunday, including three Iranian-linked oil product tankers leaving the Gulf.
Iran and Oman have reportedly held discussions on managing navigation through the Strait of Hormuz, but there has been no significant improvement in shipping volumes.
At the same time, the Bab al-Mandeb Strait at the southern entrance to the Red Sea remains under severe pressure after attacks by Iran-backed Houthi rebels on Saudi oil installations along the Red Sea coast.
Kpler data showed only 11 commodity vessels passed through the Bab al-Mandeb on Sunday—the lowest daily traffic recorded in months. The route, which normally carries around five million barrels of Saudi crude each day, has been heavily disrupted as the Houthis seek to block Saudi exports, further widening the regional conflict's impact on global energy trade.
