In brief
Oil futures dropped more than nine per cent on Monday after the United States and Iran temporarily halted hostilities, following remarks by the US ambassador. Brent slipped below $88 from peaks over $100 earlier in the week, reflecting renewed optimism that the Strait of Hormuz may reopen. Analysts warn the fall remains a single moment in a volatile corridor still marked by uncertainty about a lasting ceasefire, with global gasoline, diesel, and downstream costs reacting to the price swing. The collapse has further implications for inflation as higher energy costs feed into other consumer prices.
Oil falls more than 9% as US‑Iran pause stirs hope for resolution
Oil price sank more than 9% on Monday, as hopes that a pause in attacks between the US and Iran could help resolve the conflict take hold.
Brent crude dipped below $88 a barrel, a sharp turnaround from last week when it had risen above $100.
The fall came after the US ambassador to the UN said attacks on Iran had been halted for a second night in a row, “to give talks some space”.
An Iranian army spokesperson earlier said Tehran had stopped “retaliatory” attacks in response.
The Iran war had triggered a sharp rise in oil prices as the conflict closed the Strait of Hormuz, a key shipping route that carries roughly 20% of the world’s oil and LNG.
When a US‑Iran memorandum of understanding in June ended military operations and reopened the strait, oil prices fell back to pre‑war levels of around $70 a barrel.
The collapse of that ceasefire earlier this month reignited worries about global energy supplies, pushing oil prices back up.
Last week, for the first time since May, oil hit $100 a barrel, compounded by Houthi militia attacks in the Red Sea that threatened a major export route.
Susannah Streeter, chief investment strategist at Wealth Club, warned that markets were remaining cautious amid the twists and turns of the conflict.
Despite the sharp fall, there is still significant uncertainty baked into these prices and a reticence about whether negotiations will lead to lasting breakthroughs.
The US‑Iran drama has pushed up fuel costs like petrol and diesel worldwide, with knock‑on effects on food prices as businesses pass their higher costs onto customers, tightening inflation.
