New Delhi: Global oil prices fell by more than five per cent on Monday after US President Donald Trump paused military strikes on Iran, raising hopes that renewed diplomatic efforts could ease tensions and prevent disruptions to energy supplies through the strategically important Strait of Hormuz.
Brent crude futures dropped $5.58, or 5.77 per cent, to $91.20 a barrel, while US West Texas Intermediate crude fell $4.91, or 5.50 per cent, to $84.40 a barrel. The decline came after crude prices had surged above $100 a barrel in recent sessions as escalating military exchanges between the United States and Iran fuelled concerns over global energy supplies.
The Strait of Hormuz remains one of the world’s most critical energy corridors, carrying a substantial share of global crude oil and liquefied natural gas shipments. Any disruption to shipping through the waterway has the potential to tighten supplies, push up fuel prices and add inflationary pressure across the global economy.
Market sentiment improved after indications emerged that the conflict may not intensify in the immediate future. US Ambassador to the United Nations Mike Waltz said President Trump was allowing diplomatic talks to continue before deciding whether to resume military action. The comments came as international mediators worked to bring Washington and Tehran back to the negotiating table.
The prospect of renewed negotiations prompted traders to reduce the geopolitical risk premium that had built up in oil markets over the past two weeks. Investors had earlier priced in the possibility of supply disruptions if the conflict threatened shipping through the Strait of Hormuz.
President Trump also indicated that discussions with Iran were making progress, while making it clear that military options remained available if diplomacy failed. Israeli Prime Minister Benjamin Netanyahu, who is expected to meet Trump later this week, also expressed support for diplomatic efforts while reiterating that Iran’s nuclear programme would ultimately need to be dismantled.
Despite the sharp decline in crude prices, analysts caution that volatility is likely to persist. Shipping companies and energy producers are expected to remain cautious until the security situation in the Gulf becomes more stable. Experts also warn that any escalation involving regional groups or neighbouring countries could once again disrupt key maritime routes, keeping a geopolitical risk premium embedded in global oil markets.
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