Oil prices tumble over 6% as US-Iran tensions ease

Fiona Craig Mon, July 27, 2026 at 3:10 AM PDT | 2 min read

• CL=F -4.38%

Oil refinery at night ©Adobe Stock Images

Crude oil prices dropped sharply on Monday as investors unwound geopolitical risk premiums following indications that tensions between the United States and Iran may be easing. The selloff erased much of the rally seen last week, when fears of a wider conflict briefly pushed Brent crude close to the $100-per-barrel level.

By 06:11 GMT, Brent crude futures were down 6% at $90.93 per barrel after briefly falling below $90 earlier in the session. U.S. West Texas Intermediate (WTI) crude futures declined 6.1% to $83.83 per barrel.

Diplomatic Developments Weigh on Crude Prices

Last week, Brent climbed to around $100 a barrel after the conflict expanded beyond the Strait of Hormuz into the Red Sea, raising concerns over Middle Eastern oil exports.

However, market sentiment shifted after Washington paused its military campaign following 13 consecutive nights of strikes, allowing additional time for diplomatic negotiations after weeks of escalating hostilities.

Iran quickly responded to the move. According to Reuters, an Iranian official said Tehran would halt retaliatory attacks provided the United States maintained its suspension of military operations. Both governments have nevertheless indicated they are prepared to resume military action if negotiations fail.

Investor confidence also improved after reports on Friday suggested China is attempting to revive peace talks between Washington and Tehran, increasing hopes that diplomacy could replace military confrontation.

Analysts at ING said Monday's decline highlighted how quickly markets are reacting to any signs of reduced geopolitical risk after nearly two weeks of conflict.

While the bank noted that the pause in military action represents the clearest indication so far that tensions may be easing, it cautioned there has been little explanation from Washington regarding the decision and warned it is still too early to conclude that the conflict has entered a lasting period of stability.

Shipping Risks Continue to Support the Market

Despite the latest decline in prices, supply risks have not disappeared.

• Shipping activity through the Strait of Hormuz remained below normal over the weekend.
• Vessel movements through the Bab el-Mandeb Strait also slowed following Houthi attacks on Saudi oil infrastructure.

According to ANZ, the oil market has so far managed to absorb these disruptions through lower Chinese crude imports, emergency stock releases and alternative Saudi export routes that avoid the Strait of Hormuz.

However, the bank warned that these temporary measures are becoming increasingly difficult to sustain as strategic reserves decline, commercial inventories tighten and shipping risks remain elevated across both key maritime routes.

As a result, oil prices could move higher again if supply disruptions across the region intensify.

Brent Oil price | Crude Oil price

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