Oil prices tumble over amid halt to fighting between U.S., Iran

Oil prices fell sharply on Monday, triggered by signs of de-escalation between the United States and Iran, wiping out much of last week’s war premium that had briefly pushed Brent crude to the $100-a-barrel mark.

As of 09:22 ET (13:22 GMT), Brent crude futures had slumped 6.0% to $91.00 a barrel, while U.S. West Texas Intermediate crude futures tumbled 5.5% to $84.34 a barrel.

Brent temporarily crested $100 a barrel last week after the Iran conflict threatened to widen beyond the Strait of Hormuz to the Red Sea, potentially further disrupting crude exports from the Middle East.

But prices retreated after Washington paused its bombing campaign following 13 consecutive nights of strikes. A report from The New York Times suggested that the White House was worried that continued attacks could drain the U.S. stockpile of crucial armaments, although U.S. ambassador to the United Nations Mike Waltz later said that President Donald Trump is aiming to give "talks some space."

An Iranian official, meanwhile, told Reuters that Tehran would suspend retaliatory attacks as long as the U.S. pause remained in place. However, both sides have warned they remain prepared to resume military action if negotiations break down.

Analysts at ING said Monday’s sharp retreat reflected the market’s eagerness to price in any signs of de-escalation after nearly two weeks of fighting.

"The price action in oil this morning clearly reflects the market’s desperation for positive news," the ING analysts said in a note.

While the pause in U.S. and Iranian strikes marked the first tangible indication that tensions may be easing, the bank cautioned there has been little explanation from Washington for the halt and warned it remains too early to conclude the conflict has entered a more durable phase.

Shipping disruptions keep supply concerns alive

Despite early signs of easing in hostilities, shipping disruptions persisted. Fewer commodity vessels transited the Strait of Hormuz each day over the weekend, while traffic through the Bab el-Mandeb Strait -- a vital conduit linking the Red Sea and the Gulf of Aden -- also slowed after Houthi attacks on Saudi oil facilities. 

ANZ said the market has so far absorbed disruptions through lower Chinese crude imports, emergency stock releases and alternative Saudi export routes that bypass the Strait of Hormuz.

However, ANZ warned these buffers are becoming increasingly stretched as strategic stockpiles decline, commercial inventories tighten and risks remain to shipping through both the Strait of Hormuz and the Bab el-Mandeb Strait.