LONDON — International oil prices tumbled by more than 5% on Monday, breaks a three-week rally after the United States and Iran paused military strikes over the weekend. The temporary cessation of hostilities has raised global hopes for a diplomatic breakthrough that could de-escalate the broader Middle East conflict and safely resume shipping lanes through the critical Strait of Hormuz. Brent crude futures plummeted by $5.70, or roughly 5.9%, to sit at $91.08 a barrel, after briefly dipping below the psychologically important $90 support floor. Similarly, U.S. West Texas Intermediate (WTI) crude dropped by $4.80, or 5.4%, settling at $84.51 a barrel. The market correction comes after Brent recently flirted with the $100 per barrel mark due to severe export bottlenecks affecting top exporter Saudi Arabia, whose shipments via the Bab el-Mandeb strait to Asia were heavily choked by Houthi retaliatory strikes.
The diplomatic breathing room was confirmed by U.S. Ambassador to the United Nations Mike Waltz, who indicated that President Donald Trump has temporarily halted offensive strikes to give negotiation channels a chance. Despite the sharp drop in pricing, energy analysts remain heavily cautious. Market data from Kpler revealed that fewer than ten commodity vessels transited the Strait of Hormuz daily over the weekend, indicating that shippers remain deeply wary of structural safety risks. Experts from PVM and MST Marquee warned that a questionable, short-term ceasefire offers no long-term guarantees for stable oil flows. Furthermore, geopolitical friction points like Ukrainian drone strikes on Russian refineries and ongoing insurance premiums in the Red Sea—which Societe Generale estimates add $10 a barrel for every month without a resolution—will continue to pose significant upside inflation risks to the global economy.
