Brent crude prices fell sharply on Monday, dropping toward $98 per barrel as markets reacted to growing optimism over possible negotiations between the United States and Iran aimed at easing tensions in the Middle East.
The decline extended losses from last week, with investors betting that a potential agreement could eventually reopen the Strait of Hormuz, one of the world’s most critical oil shipping routes, and restore disrupted energy flows.
Brent crude was trading around $98.45 to $98.80 per barrel during Monday trading, down nearly 5% on the day, while U.S. West Texas Intermediate crude also slipped below $92.
The market reaction followed reports that Washington and Tehran were moving closer to a framework that could lead to the reopening of the Strait of Hormuz, the release of some frozen Iranian assets and renewed talks over Iran’s nuclear programme.
However, U.S. President Donald Trump cautioned that no final agreement had been reached and said Washington would maintain restrictions around Hormuz until a formal deal is completed. “I won’t rush into a deal,” he said.
The Strait of Hormuz handles roughly one-fifth of global oil and liquefied natural gas shipments, making it one of the most strategically important waterways in global trade. Its disruption over the past several months has intensified supply concerns, pushed up freight costs and fuelled inflation fears across major economies.
Although prices have now retreated below the psychologically important $100 mark, analysts say oil markets remain highly volatile because the conflict has not been fully resolved and shipping flows have not yet normalised.
Financial markets broadly welcomed the easing tensions. European and Gulf stock markets advanced on Monday, while airline and transport stocks gained from expectations of lower fuel costs.
Still, uncertainty remains high. Analysts warn that if negotiations collapse or the Strait remains partially disrupted, oil prices could rebound sharply in the coming weeks.
