Global oil prices fell sharply on Monday after US President Donald Trump announced that Washington would resume negotiations with Iran in a renewed push to end the months-long conflict and ease tensions around the Strait of Hormuz.
Brent crude, the international oil benchmark, dropped 4.69 per cent to $83.81 per barrel in early Asian trading, while US West Texas Intermediate (WTI) crude fell 4.67 per cent to $80.72 per barrel.
The price decline came after Trump revealed that fresh negotiations with Iran would begin on Monday, saying he had suspended plans for further military strikes in favour of diplomacy.
Speaking aboard Air Force One on Sunday, Trump said the discussions would focus on reopening the Strait of Hormuz and addressing Iran’s nuclear programme.
“Now what we’re doing is we’re talking to them in the form of a negotiation. It begins tomorrow afternoon,” Trump said, without disclosing where the talks would take place or who would participate.
The announcement eased fears of an immediate escalation in the Middle East, prompting traders to reduce the geopolitical risk premium that had pushed oil prices higher in recent weeks.
The conflict, which erupted in late February following US and Israeli strikes on Iran, has disrupted global energy markets and severely affected shipping through the Strait of Hormuz, one of the world’s busiest oil transit routes.
Adding to signs of possible diplomatic progress, Iranian officials said they were close to reaching an agreement with Oman on a new shipping route through the strategic waterway after Washington suspended plans for further attacks.
The Strait of Hormuz remains a critical gateway for global energy exports, with a significant share of the world’s crude oil and liquefied natural gas passing through the narrow channel each day.
Any improvement in access to the waterway is expected to ease supply concerns and reduce pressure on global oil markets.
