Oil prices fell sharply on Monday as investors watched the latest back-and-forth in the U.S. war with Iran.
Over the weekend, President Trump said that he had halted a planned U.S. assault as Iran and allies in the Middle East asked him to pause any new strikes in the war that started five months ago. He said talks with Iran would begin on Monday.
Iran said on Monday that it was meeting with Oman to discuss temporarily reopening the Strait of Hormuz, the narrow waterway between Iran and Oman that is a vital trading route for oil and natural gas. It normally carries as much as one-fifth of the world’s oil supply
Oil prices drop.
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The price of Brent crude, the global benchmark for oil, fell more than 5 percent on Monday, to about $83 a barrel.
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West Texas Intermediate crude, the U.S. benchmark, dropped more than 5 percent, to about $80 a barrel.
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Mr. Trump, in a post on Truth Social on Sunday, said that the “perimeters of a deal” were being worked out to open the Strait of Hormuz. For months, the waterway has been effectively closed by blockades imposed by Iranian and American forces.
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Shipping traffic through the Strait remained modest over the weekend, with 20 ships passing through on Saturday and Sunday, according to Kpler, a maritime data company. Before the war, around 130 ships traversed the strait every day.
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On Sunday, the oil cartel known as OPEC Plus approved a modest increase in oil production of around 188,000 barrels a day, in an effort “to support oil market stability,” it said.
Stocks tick up.
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Futures on the S&P 500 pointed to a small increase when stocks resume trading in the United States on Monday.
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In Europe, the Stoxx 600, a broad index that tracks the region’s largest companies, rose about half a percent.
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Stocks in Asia, where countries import vast quantities of oil and gas, mostly fell, driven by declines in technology stocks.
Gasoline prices hold steady.
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Gas prices were flat on Monday, at a national average of $4.10 a gallon, according to the AAA motor club. The increase has raised the cost for drivers by more than 37 percent since the war began.
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Gas prices don’t move in lock step with crude, usually trailing increases or drops by a few days.
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The average price of diesel was $5.36 a gallon on Monday, up more than 42 percent since the start of the war.
What they are saying: ‘The relief is meaningful but provisional.’
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The efforts to open communications between the United States and Iran have giving the oil market a respite, Geoff Yu, an analyst at BNY, wrote in a research note.
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“The relief is meaningful but provisional,” he wrote. “Tehran has yet to endorse the reported framework publicly, leaving markets alert to another reversal.”
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