Global oil prices retreated on Monday after US President Donald Trump announced he had halted a planned military strike against Iran, opting instead to pursue diplomatic negotiations aimed at resolving the ongoing Middle East conflict.
Brent crude futures for July delivery fell US$1.73, or 1.5 per cent, to US$110.37 per barrel at 08:25 GMT, according to Reuters.
US West Texas Intermediate crude for June delivery (expiring the same day) declined US$0.63, or 0.6 per cent, to settle at US$108.03 per barrel.
The more actively traded July WTI contract dropped US$0.82, or 0.8 per cent, to US$103.56 per barrel.
The pullback follows a strong prior session in which both benchmarks reached multi-week highs.
Brent touched its highest level since 5 May, while WTI climbed to its strongest point since 30 April, reflecting the market anxiety that had built amid escalating tensions in the region.
Trump disclosed on social media that a military strike against Iran, which had been scheduled for Tuesday, was being postponed to allow ongoing peace efforts to continue.
He made clear, however, that the US remained prepared to resume military action should negotiations fail to produce an agreement.
In a parallel development, Iran submitted a peace proposal to Washington through state media channels.
The plan calls for an immediate halt to hostilities across all fronts, including Lebanon, the withdrawal of US forces from areas in proximity to Iran, and financial compensation for damages sustained during the conflict.
The broader supply disruption underpinning elevated prices has been severe.
The Middle East conflict has resulted in the closure of the Strait of Hormuz, the strategic waterway through which approximately 20 per cent of the world’s oil and liquefied natural gas ordinarily flows.
The International Energy Agency has characterised the disruption as one of the largest seen in the global oil supply sector.
Compounding supply pressures in the US, government data revealed a drawdown of 9.9 million barrels from the Strategic Petroleum Reserve, bringing stockpiles to roughly 374 million barrels, the lowest level recorded since July 2024.
On the sanctions front, US Treasury Secretary Scott Bessent moved to ease pressure on energy-importing nations by granting a 30-day extension on a waiver that permits countries classified as energy-vulnerable to continue purchasing Russian seaborne oil.
Reuters reported that the decision followed calls from nations struggling to secure Gulf oil supplies as a result of the Hormuz blockage.
Bessent indicated the extension was intended to provide relief to countries caught between constrained Gulf supply routes and existing sanctions frameworks.
The combination of diplomatic signalling from Washington and the waiver extension introduced a measure of relief to markets, though analysts noted that significant uncertainty remains.
The Strait of Hormuz closure continues to weigh heavily on global supply chains, and any breakdown in US-Iran talks could rapidly reverse Monday’s price declines.
Market participants are expected to closely monitor the trajectory of negotiations in the days ahead.
