Oil Prices Plummet as Trump Calls Off Iran Attack

Oil prices plummeted on Monday after US President Donald Trump announced that he had called off a planned attack on Iran and would instead pursue negotiations to reopen the Strait of Hormuz. The Brent for October settlement fell by 5.2% to $83.32 a barrel at 6:01 a.m. in London, while West Texas Intermediate for September delivery declined by 6% to $79.51 a barrel.

Trump's decision was reportedly influenced by his allies in the Middle East, including Saudi Arabia, which asked him to pursue a deal instead of an attack. The US leader said on Sunday that he had agreed to cancel the assault 'subject to being able to rapidly make a DEAL' to quickly reopen the Strait of Hormuz.

Takahiro Asaoka, a commodities researcher at Itochu Research Institute Inc., attributed the drop in oil prices to relief that further escalation has been avoided. However, he warned that a sustained decline in oil prices is difficult unless there's an agreement that allows shipping through the Strait of Hormuz to return to normal.