OIL PRICES FALL AS US-IRAN PAUSE EASES FEARS OVER HORMUZ DISRUPTION
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Agency Report
Oil prices fell sharply on Monday as a temporary pause in hostilities between the United States and Iran raised hopes of renewed ceasefire efforts and negotiations to reopen the Strait of Hormuz, a key global oil shipping route.
Following 13 days of exchanges targeting sites in Iran, the United States refrained from carrying out further strikes over the weekend. President Donald Trump’s envoy to the United Nations said Washington was allowing room for diplomacy.
Iran also announced it would suspend retaliatory attacks on neighbouring countries, providing some relief to Gulf shipping operations and global energy markets.
The latest conflict erupted earlier this month after Iran targeted vessels transiting the Strait of Hormuz through Omani waters, shattering a fragile truce and triggering renewed tensions between Tehran and Washington.
The violence later spread beyond the strategic waterway, with Iran-backed Houthi rebels in Yemen launching attacks on Saudi-linked vessels in the Bab al-Mandeb Strait, another critical maritime route connecting the Red Sea.
The escalation had driven crude oil prices above $100 per barrel last week, with Brent crude reaching its highest level since May. However, reports that commercial shipping continued through the Red Sea, coupled with signs of diplomatic progress, prompted investors to scale back their positions.
Iran’s Foreign Ministry said discussions with Oman had focused on developing operational mechanisms to ensure the safe passage of vessels through the Strait of Hormuz while respecting the sovereignty of both countries.
Media reports also indicated that Pakistan, with support from China, is exploring efforts to revive direct peace talks between the United States and Iran.
The easing geopolitical tensions triggered a sharp decline in oil prices, with Brent crude falling by more than seven per cent at one stage before slipping below $90 per barrel.
Analysts said the developments suggested that rising oil prices may have encouraged both sides to pursue de-escalation rather than prolong the conflict.
The decline in crude prices also eased concerns over renewed inflationary pressures and the possibility of further interest rate hikes, helping lift global equity markets.
Asian markets recorded gains, with Seoul, Tokyo, Hong Kong, Shanghai, Sydney, Singapore, Mumbai and Manila closing higher, while London’s FTSE 100, France’s CAC 40 and Germany’s DAX also opened in positive territory.
Despite the broader market optimism, investors remained cautious over the sustainability of the artificial intelligence boom as major technology firms continue to face scrutiny over heavy capital spending.
Market attention has now shifted to earnings reports from leading chipmakers, including SK hynix, Samsung and Japan’s Kioxia, as well as US technology giants Microsoft, Meta, Apple and Amazon, whose financial results are expected to provide insight into future spending and growth prospects.
Investors are also awaiting the US Federal Reserve’s latest monetary policy decision, with analysts widely expecting the central bank to keep interest rates unchanged despite lingering geopolitical uncertainty.
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