Oil prices fell nearly 5% on Monday as US President Donald Trump held off on a fresh attack against Iran in an effort to reach a deal that would curb Tehran’s nuclear ambitions and reopen the Strait of Hormuz.
Brent crude futures fell US$4.08 or 4.64% to US$83.85 a barrel, while US West Texas Intermediate crude declined US$4.01 or 4.74% to US$80.66 as of 11.52pm GMT on Sunday.
The retreat came after both benchmarks surged more than 20% in July as renewed fighting between the US and Iran and attacks on tankers around Oman raised concerns over shipping and oil supplies through the Gulf.
Trump said on Saturday that Iran and other Middle Eastern countries had asked for more time to reach a deal that would reopen the Strait of Hormuz and end Iran’s nuclear threat.
However, IG market analyst Tony Sycamore warned that the latest de-escalation could face another setback if negotiations collapse.
Meanwhile, two tankers carrying Saudi crude crossed the Bab el-Mandeb Strait from the Red Sea over the weekend, although traffic through the Strait of Hormuz remained slower following reported vessel attacks.
The United Kingdom Maritime Trade Operations has reported three more tanker attacks since Saturday.
Adding to supply considerations, OPEC+ approved an increase of around 188,000 barrels per day in its September oil production quota on Sunday, completing the unwinding of a layer of voluntary output cuts.
However, the impact of the planned increase has been limited as export disruptions linked to the Iran and Ukraine wars have kept much of the previous monthly production increases from reaching the market.
Reuters
