Oil Prices Plummet as US-Iran Pause Unwinds Geopolitical Premium

Oil prices fell sharply on Monday as the US and Iran paused their attacks, leading traders to unwind part of the geopolitical premium built into crude.

Brent crude futures dropped $4.89, or 5.05%, to $91.89 a barrel, while West Texas Intermediate declined $4.67, or 5.23%, to $84.64.

The decline does not mean the Iran crisis has ended, but reflects a lower probability of an immediate supply shock, with the Strait of Hormuz still heavily restricted and the pause uncertain.

A US decision to suspend its bombing campaign created space for diplomacy after 13 nights of strikes. Iran said it would also hold fire as long as Washington maintained its pause, although an Iranian official expressed skepticism about the latest lull.