Oil prices fell sharply Monday as President Donald Trump signaled a potential shift in strategy regarding the ongoing conflict with Iran, whereas simultaneously urging international allies to secure the Strait of Hormuz. International benchmark Brent crude futures closed at $100.21 per barrel, a 2.84% decrease and U.S. West Texas Intermediate futures settled at $93.50, down 5.28%.
The price decline followed a statement by Trump that the U.S. Military had struck more than 7,000 targets across Iran, achieving what he claimed was a “90% reduction in their ballistic missile launches and a 95% reduction in drone attacks.” The President also reiterated calls for nations reliant on oil transported through the Strait of Hormuz to actively participate in safeguarding the vital shipping lane.
Treasury Secretary Scott Bessent added to the evolving narrative, stating that the U.S. Is currently permitting Iranian oil tankers to pass through the Strait of Hormuz. This decision contrasts with earlier concerns about potential disruptions to global oil supplies, which had driven prices to a high of over $106 per barrel earlier in the day.
The fluctuations in oil prices have had a ripple effect on global markets. The S&P 500 climbed 1% Monday, marking its largest gain in five weeks, while the Dow Jones Industrial Average rose 387 points, or 0.8%. The Nasdaq composite also saw gains, jumping 1.2%. The stock market’s positive response was directly linked to the easing of pressure from high oil prices, which had previously topped $102 a barrel.
Despite the recent dip, oil prices remain significantly elevated compared to pre-war levels, which hovered around $70 per barrel. The conflict, which began over a week ago, has paralyzed shipping through the Strait of Hormuz, a waterway through which approximately 20% of the world’s oil supply typically transits. Amin Nasser, the CEO of Saudi Aramco, warned of “catastrophic consequences” if the Strait remains blocked, noting that global oil stockpiles are at their lowest levels in five years.
The White House confirmed that the U.S. Navy has not yet escorted any tankers through the Gulf passage, despite a brief and subsequently retracted post on X by U.S. Energy Secretary Chris Wright claiming such an operation had been successful. Trump indicated that an announcement regarding which countries have committed to a coalition to protect tankers in the Strait of Hormuz would be forthcoming, while also expressing frustration with nations hesitant to join the effort. He specifically alluded to long-standing protection agreements with certain countries, suggesting a potential reevaluation of those commitments.
The UK government’s official forecaster has warned that the ongoing conflict could push UK inflation to 3% by the complete of the year, higher than the previously forecast 2%, should energy prices remain at current levels.
