Oil tumbles as Trump cancels attack on Iran to reach nuclear deal

Oil prices plummeted more than US$4 per barrel on August 3 following US President Donald Trump's decision to halt a planned attack on Iran. The goal was to secure a swift agreement that would curb Tehran's nuclear program and reopen the Strait of Hormuz. Brent crude futures dropped US$4.65, or 5.29%, to US$83.28, while US West Texas Intermediate crude fell US$5.20, or 6.14%.

Both contracts had surged over 20% in July due to renewed US-Iran hostilities and heightened security concerns after tanker attacks in the Gulf, restricting shipping access to the region. In a statement on his Truth Social platform, Trump said Iran and other Middle Eastern nations had requested time to finalize the deal, leading to the reopening of the strait and an end to Iran's nuclear threat.

Analyst Tony Sycamore noted that the immediate focus was on whether this week would repeat last week's events, with hopes of a deal collapsing as Iran persisted in limiting strait access, potentially through an attack on a US base or a tanker. On August 3, two Saudi oil tankers crossed the Bab el-Mandeb Strait out of the Red Sea, and traffic in the Strait of Hormuz slowed following reports of vessel attacks.

The United Kingdom Maritime Trade Operations reported three more tanker attacks since August 1. On August 2, OPEC+ approved an oil production increase of about 188,000 barrels per day starting in September, completing the organization's unwinding of voluntary output cuts. Export disruptions from the Gulf, Russia, and Kazakhstan, caused by the Iran and Ukraine conflicts, led to successive monthly OPEC+ hikes throughout 2026, which failed to produce additional oil on the market and had a minimal impact on prices.