Oil dives 9% below $88 as US and Iran pause attacks for third night

Brent crude, the global oil benchmark, tumbled more than 9% on Monday, sinking below $88 a barrel as the United States and Iran paused military strikes for a third consecutive night. The sharp reversal from last week’s levels above $100 came after the US ambassador to the United Nations said attacks had been halted to give “talks some space,” according to the BBC. Iran’s army spokesperson confirmed on Sunday that Tehran had also suspended what it called “retaliatory” operations in the region.

The renewed fighting had effectively closed the Strait of Hormuz, a waterway that normally carries about 20% of the world’s oil and liquefied natural gas. Last week, Brent hit $100 for the first time since May, with added pressure from Houthi attacks on tankers in the Red Sea threatening a Saudi export bypass. Susannah Streeter, chief investment strategist at Wealth Club, said markets remained “cautious given the twists and turns during this conflict.”

She added, “There is still significant uncertainty baked into these prices and a reticence about whether negotiations will lead to a lasting breakthrough.” The pause in hostilities coincided with technical talks between Iran and Oman over management of the strait, which Iranian foreign ministry spokesman Esmail Baghaei described as productive. A regional official involved in mediation told NPR that the halt in strikes was a “positive signal that helps their efforts to de-escalate.”

US ambassador Mike Waltz told NBC, “I wouldn’t go that far at all. The president is keeping all options on the table,” while communications director Steven Cheung said Trump retained all options if Iran continued “terrorist activities in the Strait of Hormuz or against allies.” The conflict’s disruption to fuel costs had already pushed up petrol and diesel prices in many countries, with knock-on effects on food and other goods. Israeli Prime Minister Benjamin Netanyahu, a vocal critic of negotiations with Iran, is set to meet Trump at the White House on Tuesday.

Meanwhile, the UK’s new defence secretary, Wes Streeting, said he would discuss securing the strait with his US counterpart this week, calling freedom of navigation “absolutely aligned” between the allies. Despite the diplomatic flurry, the White House kept military options on the table.