BY COMFORT OGBONNA
Oil prices fell sharply on Monday after U.S. President Donald Trump delayed plans for further military action against Iran as efforts continued toward a possible agreement aimed at limiting Tehran’s nuclear program and restoring shipping access through the Strait of Hormuz.
Brent crude futures dropped $4.49, or 5.11%, to $83.44 a barrel by 0408 GMT, while U.S. West Texas Intermediate crude declined $4.90, or 5.79%, to $79.77 a barrel.
The decline followed a sharp rally in oil markets last month, when both benchmarks gained more than 20% after renewed fighting between the United States and Iran, along with attacks on several tankers near Oman, increased concerns about supply disruptions and reduced shipping activity in the Gulf region.
Market sentiment improved after Trump said Iran and other Middle Eastern countries had requested additional time to finalize an agreement that could lead to the reopening of the Strait of Hormuz and reduce tensions surrounding Iran’s nuclear activities.
The Strait of Hormuz is one of the world’s most important energy shipping routes, with a significant portion of global oil supplies passing through the narrow waterway. Any disruption could quickly affect global energy prices.
Analysts said the market remains cautious, as investors continue to watch whether diplomatic efforts will succeed or whether tensions could rise again.
“The bigger focus is whether this week turns into a repeat of last week, with hopes for a deal collapsing as Iran maintains pressure through its control of the Strait,” said Tony Sycamore, a market analyst.
Concerns over shipping security remain after reports of additional tanker attacks in the region. Two vessels carrying Saudi oil crossed the Bab el-Mandeb Strait from the Red Sea over the weekend, while traffic through the Strait of Hormuz slowed following reports of vessel incidents.
The United Kingdom Maritime Trade Operations reported three additional tanker attacks since Saturday, keeping pressure on shipping companies operating in the region.
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, agreed on Sunday to increase oil production quotas by about 188,000 barrels per day beginning in September. The move completes the group’s plan to gradually reverse a portion of its voluntary production cuts.
However, previous monthly production increases have had a limited impact on global supply because disruptions linked to conflicts involving Iran, Ukraine, Russia and Kazakhstan have reduced actual exports.
Investors are now watching diplomatic developments between the United States and Iran, shipping activity in key waterways and the impact of OPEC+ production changes as they assess the outlook for oil prices in the coming weeks.
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