Global oil prices fell sharply in early Asian trading on Monday after United States President Donald Trump announced that Washington would resume negotiations with Iran, a move that boosted expectations of easing tensions in the Middle East and restoring the flow of oil through the strategically important Strait of Hormuz.
The decline reflects renewed optimism in the energy market that diplomacy could reduce the risk of prolonged supply disruptions, following months of heightened uncertainty caused by the conflict involving the United States, Israel and Iran.
Brent crude, the international benchmark for oil prices, dropped 4.69 per cent to $83.81 per barrel for September delivery as of about 2250 GMT on Sunday.
Similarly, US benchmark West Texas Intermediate (WTI) fell 4.67 per cent to $80.72 per barrel, mirroring investors’ growing confidence that fresh diplomatic efforts could stabilise global energy supplies.
Oil markets have remained highly volatile since the conflict, which began in late February after the United States and Israel launched attacks on Iran. The hostilities effectively disrupted movement through the Strait of Hormuz, one of the world’s most critical shipping lanes for crude oil and liquefied natural gas, triggering fears of tighter global supplies and pushing prices higher.
However, market sentiment shifted after Trump revealed that his administration would pursue negotiations with Tehran instead of immediately escalating military action.
Speaking on Sunday, the US president said fresh discussions with Iran would commence on Monday.
> “Now what we’re doing is we’re talking to them in the form of a negotiation. It begins tomorrow afternoon,” he said, without providing further details of the venue of the talks or the participants.
The announcement came shortly after Washington reportedly suspended plans for major strikes against Iran, signalling a preference for diplomacy over further military escalation.
Adding to the positive outlook, Iran also announced on Sunday that it was close to reaching an agreement with Oman on establishing a new route through the Strait of Hormuz.
The development has strengthened expectations that a diplomatic breakthrough could help restore confidence in global energy markets and reduce concerns over disruptions to one of the world’s busiest oil transit corridors.
While traders welcomed the latest developments, analysts say oil prices are likely to remain sensitive to any changes in the negotiations, as investors continue to monitor both diplomatic progress and security conditions in the Gulf region. A successful outcome could ease pressure on global energy markets, while any setback may quickly reverse the latest price declines.