Oil prices tumbled more than $4 a barrel on Monday after US President Donald Trump held off on a fresh attack on Iran, seeking to reach a quick deal that would halt Tehran's nuclear ambitions and reopen the Strait of Hormuz.
Brent crude futures slid $4.49, or 5.11%, to $83.44 by 0408 GMT while US West Texas Intermediate crude was at $79.77 a barrel, down $4.90, or 5.79%, reported Reuters.
Both contracts jumped more than 20% last month after fighting between the US and Iran resumed and as attacks on several tankers around Oman heightened security concerns, deterring shippers from entering the Gulf to load oil. In a sign of de-escalation, Trump said late on Saturday on his Truth Social platform that Iran and other Middle Eastern countries had asked for time to complete a deal that would lead to "the Immediate, Complete and Total" reopening of the vital strait and "an end to Iran's nuclear threat".
"The bigger focus is whether this week turns into a rinse and repeat of last week — with hopes of a deal collapsing as Iran digs in its heels and continues to leverage its control over the Strait, potentially through an attack on a US base or a tanker transiting the waterway," IG market analyst Tony Sycamore said.
Two tankers laden with oil crossed the Bab el-Mandeb Strait out of the Red Sea over the weekend while traffic in the Strait of Hormuz slowed following reports of vessel attacks, shipping data showed on Monday. The United Kingdom Maritime Trade Operations has reported three more tanker attacks since Saturday.
On Sunday, OPEC+ approved an oil production quota increase of around 188,000 barrels per day from September, the producer group said, in a move that completes the unwinding of a layer of voluntary output cuts.
Due to export disruptions from the Gulf, Russia and Kazakhstan caused by the Iran and Ukraine wars, successive monthly OPEC+ hikes over most of this year have remained largely on paper with little impact on the market.
