Key Points
- Trump announces fresh Iran talks, pauses new strikes.
- Yen extends gains after rare US-Japan intervention.
- Asian equities mixed as investors assess market outlook.
ISLAMABAD: Oil prices tumbled more than 4 per cent on Monday after US President Donald Trump said fresh talks with Iran would begin later in the day and ordered US forces to hold off on new strikes.
Trump’s statement raised hopes on Sunday of a de-escalation in the Middle East that could ease risks to global oil supplies.
Brent crude futures fell to around $83.9 a barrel. Meanwhile, US West Texas Intermediate (WTI) crude slipped to about $80.6 a barrel.
Both the benchmarks extended losses after investors scaled back concerns over potential disruptions to energy shipments through the Strait of Hormuz.
ALSO READ: Oil Prices Drop as Trump Suspends Iran Strikes
The benchmarks had climbed above $100 a barrel during the height of recent hostilities between Iran and the United States before reversing sharply on signs of renewed diplomacy.
Oil market sentiment improves
Market sentiment improved after Trump said Washington would pursue negotiations with Tehran to resolve the conflict and to reopen the Strait of Hormuz. The narrow waterway is one of the world’s most critical oil transit routes.
The prospect of uninterrupted supplies prompted traders to unwind part of the geopolitical risk premium built into crude prices.
In currency markets, the Japanese yen extended its gains after Japan and the United States confirmed a rare coordinated intervention to support the currency, marking the first such joint action since 2011.
The yen strengthened to its highest level in about three months, with officials in both countries indicating they were prepared to act again if necessary.
Asian stock markets traded mixed as investors balanced lower energy prices and the stronger yen against concerns over technology valuations and the outlook for global growth.
Japan’s Nikkei fell, South Korea’s Kospi declined sharply after recent gains, while Hong Kong’s Hang Seng edged higher.
Lower oil prices are expected to ease inflationary pressures by reducing fuel and transportation costs.
However, analysts caution that crude markets remain highly sensitive to developments in the Middle East and any disruption to shipping through the Strait of Hormuz.
The Iran-US conflict has driven some of the sharpest swings in global oil prices in recent years, with markets reacting almost instantly to military escalation and diplomatic breakthroughs.
The war erupted on February 28, 2026, triggering fears of supply disruptions from the Middle East and threats to shipping through the Strait of Hormuz, the world’s most important oil transit chokepoint, which carries about one-fifth of global crude supplies.
Those concerns pushed Brent crude from the high-$60s into the $80s within days as traders priced in mounting geopolitical risks.
Through March and April, repeated attacks on energy infrastructure and heightened tensions kept oil markets on edge. The evolving situation prompted analysts to raise price forecasts amid warnings that prolonged disruptions could keep crude elevated for much of the year.
Prices retreated whenever prospects for diplomacy emerged. Temporary pauses in fighting, efforts to secure shipping lanes and renewed indirect contacts between Washington and Tehran gradually reduced the geopolitical risk premium.
Eventually, the Pakistan-mediated Islamabad Memorandum of Understanding between the US and Iran pulled Brent back towards pre-war levels.
However, fresh military exchanges in July reignited concerns over regional stability, briefly sending Brent above $100 a barrel as investors feared disruptions to tanker traffic through the Strait of Hormuz.
The latest reversal came after US President Donald Trump announced fresh talks with Iran and suspended planned military action, reviving hopes of de-escalation.
The repeated boom-and-bust cycle over the past five months has highlighted the oil market’s sensitivity to developments in the Middle East. Every military strike, a threatening statement, a ceasefire announcement or a diplomatic initiative has translated almost immediately into sharp movements in global energy prices.
