Oil prices dropped over 10 per cent on Monday after US President Donald Trump said he would postpone any military strikes against Iranian power plants for five days.
Brent futures fell by $12.25 or 10.9 per cent to settle at $99.94 a barrel, while the US West Texas Intermediate (WTI) crude lost $10.10 or 10.3 per cent to trade at $88.13 per barrel.
President Trump claimed that constructive talks to resolve hostilities in the Middle East were going, hours before a deadline that threatened to escalate the four-week-old war over the Strait of Hormuz, where roughly 20 per cent of global oil and liquefied petroleum gas (LNG) flows through and which disruption has already driven a sharp spike in crude prices and heightened fears of a prolonged supply shock.
The Iranian media claimed there had been no direct or indirect contact with President Trump.
Iran’s Revolutionary Guards had said they would attack Israel’s power plants and those supplying US bases across the Gulf region if America follows through with Mr Trump’s threat to “obliterate” Iran’s power network. The war has already damaged major energy facilities in the Gulf and effectively halted shipping through the strait.
Amid the tussle, it was reported that two tankers bound for India sailed through the Strait of Hormuz on Monday carrying LNG loaded in the United Arab Emirates and Kuwait.
The head of the International Energy Agency (IEA), Mr Fatih Birol, estimated that since the current crisis, which started with bombings against the regime in Tehran on 28 February, there have been losses of 11 million barrels of oil per day and about 140 billion cubic metres of gas.
Mr Birol said that about 5 million barrels of oil had been lost in the two previous crises in 1973 and 1979, while Russia’s 2022 invasion of Ukraine removed about 75 billion cubic metres of natural gas from international markets.
The supply crunch has led to a temporary waiver of US sanctions on Russian and Iranian oil already at sea. Indian refiners plan to resume buying Iranian oil while refiners elsewhere in Asia are examining such a move.
There was a surplus in global oil markets at the start of 2026, but recent developments have sparked shortages and growing anxieties around the world.
Beyond supply, some demand has also been affected as global air travel remains severely disrupted after the Iran war forced the closure of key Middle Eastern hubs including Dubai, Doha and Abu Dhabi, stranding tens of thousands of passengers.