NEW YORK: Oil prices hit a one-week low on Monday after the US abruptly suspended a campaign of air strikes against Iran over the weekend, raising hopes of a diplomatic solution that would de-escalate the conflict and allow shipping to resume in the Strait of Hormuz.
Brent crude futures were down $7.78, or 8 per cent, at $89 a barrel by 1:40 pm EDT (1740 GMT). They fell as much as 9.5pc earlier in the session to $87.55 a barrel, the lowest since July 20.
US West Texas Intermediate crude futures fell to $82.89 a barrel, down $6.42, or 7.2pc. They dropped as much as 8pc earlier in the day, also hitting a one-week low.
Brent futures last week crossed $100 as the conflict, which has reduced oil shipments via the Strait of Hormuz, spilled over to the Red Sea, hindering exports from the world’s top exporter, Saudi Arabia, via the Bab-al-Mandeb strait to Asia.
The US ambassador to the United Nations, Mike Waltz, told “Fox News Sunday” and other US media that President Donald Trump had decided to pause US attacks to allow more time for diplomacy.
Trump on Monday said the US is holding “good talks” with Iran, and that “there’s a good chance that something could happen” in regard to a potential deal. However, he also threatened “strong military action” if diplomacy fails.
Oil prices fell throughout Monday’s session even as Saudi Arabia’s air defences intercepted and destroyed drones launched from Iraq and Yemen’s Houthis claimed they had targeted sensitive crude oil supply and transport sites linking eastern Saudi Arabia to the critical Red Sea oil export hub of Yanbu.
“The market seems to be forever seeking good news from an arena that really is not providing any,” said PVM analyst John Evans. “A stay of military strikes might seem an improvement, but it does not come with any guarantees that oil will soon flow from the area,” he said, adding that the market will only continue lower if high prices once again dent demand, not due to “questionable mini-ceasefires”.
Uncertain outlook
Oil markets are likely to be highly volatile in response to updates around the unofficial ceasefire between the US and Iran, with industry analysts warning that the physical flow of oil remains constrained despite the truce.
“Shipping volumes remain heavily depressed after a brief mid-June ceasefire, limiting Middle East exports and forcing longer, costlier reroutes via Suez for Saudi Red Sea cargoes,” said Alex Hodes, director of energy market strategy at brokerage StoneX.
Fewer than 10 commodity vessels passed through the Strait of Hormuz daily during the weekend, shipping data from Kpler showed. “Flows fell to something like 15pc of pre-war levels, against a normal run rate of roughly 20 million barrels a day of crude, condensate and products.
A political pause doesn’t put a single extra barrel on the water right here and now,” said Ole Hvalbye, market analyst at SEB Research.
In addition, ship traffic through the Bab-al-Mandeb strait fell on Sunday after Yemeni Houthis attacked Saudi oil installations along the Red Sea coast, although a third Chinese supertanker exited via the waterway.
Published in Dawn, July 28th, 2026
