Oil slumps as Trump holds off Iran attack, says talks will resume
Brent for October lost as much as 7.3% in early Asia trade, after futures surged almost a quarter in July in their biggest monthly gain since March.
Oil prices declined following US President Donald Trump's announcement that new talks with Iran would commence on Monday, as he called off a planned attack on the Islamic Republic. Brent for October saw a 7.3% drop in early Asia trade, after futures surged nearly 25% in July, marking their largest monthly gain since March. West Texas Intermediate closed below $81.
The US leader stated on Air Force One that he had canceled the assault on Iran, contingent on the ability to swiftly reach a deal to reopen the Strait of Hormuz. The price decline reflects relief at averting further escalation, driven by short covering and easing geopolitical risk premium. However, sustained oil price decline appears unlikely until an agreement is reached to restore normal shipping through the Hormuz Strait.
European natural gas also dropped by up to 6.3% in early Asian trading. Oil futures briefly recovered as UK Maritime Trade Operations reported an explosion near a tanker off Oman, but the threat to shipping persists. Gulf producers are exploring alternative export routes, with Turkey and Iraq extending an oil pipeline deal by a year to boost capacity.
Iranian Foreign Minister Abbas Araghchi reported that Iran and Oman are nearing final negotiations on a new route through the Strait. Meanwhile, OPEC+ nations approved a minor increase in production quotas, signaling a potential resumption of oil supply once the Middle East conflict ends. Despite this, the pace of exports remains contingent on tanker willingness to navigate the Hormuz Strait, which has been disrupted by recent attacks on vessels.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
