Oil falls over 5% as Trump calls off Iran strike, announces fresh talks

Oil prices slumped more than 5% on Monday, falling to their lowest levels in three weeks, as U.S. President Donald Trump said negotiations with Iran would resume this week.

As of 09:39 ET (13:39 GMT), Brent crude futures expiring in October had dropped 5.6% to $82.99 per barrel, while U.S. West Texas Intermediate (WTI) crude futures had declined 7.2% to $78.57 per barrel.

Both contracts slipped more than 5% last week, but marked a monthly jump of more than 20% in July.

Trump said on late Saturday that he had called off a massive planned U.S. military strike on Iran after Tehran and several Middle Eastern countries requested time for negotiations.

"This (deal) would include the Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT, and an end to Iran’s nuclear threat," Trump wrote in a Truth Social post. He said the U.S. remained ready to attack Iran if diplomacy failed.

Oil prices have gyrated amid a recurring cycle of threats and pullbacks. Last week, Brent crude jumped as the conflict appeared set to spread to other parts of the Middle East, stoking fears of wider disruptions to regional energy infrastructure and shipping.

Iran-backed groups launched drone attacks on Saudi oil facilities, while strikes hit natural gas vessels at Egypt’s Damietta port and targeted shipping routes in both the Strait of Hormuz and the Red Sea, raising concerns that the conflict was expanding to multiple energy transit chokepoints. The developments briefly pushed Brent crude above $90 a barrel.

"Brent is under pressure and Treasury yields are down, both positive developments, but investors are keeping their enthusiasm in check as ’we’ve been here before’ and it’s likely the conflict has further to go before reaching a resolution," analysts at Vital Knowledge said in a note.

The latest decline in oil prices was reinforced by OPEC+’s decision on Sunday to raise production quotas by about 188,000 barrels per day from September, completing the unwinding of a round of voluntary output cuts introduced in 2023.

While previous quota increases had little impact because of supply disruptions in Iran, Russia and Kazakhstan, the latest move signaled the producer group remains committed to gradually restoring output as geopolitical risks show signs of easing.