Oil Prices Plummet as US-Iran Truce Raises Hopes for Diplomatic Breakthrough

Oil prices plummeted by over 9% on Monday after a weekend truce between the US and Iran, sparking hopes of a diplomatic breakthrough in the region. The sudden drop in prices was the largest single-day decline in weeks, with Brent crude briefly dipping below $88 a barrel before settling around $90.

The pause in military strikes came after 13 consecutive nights of US airstrikes on Iranian targets. President Donald Trump decided to halt attacks to give diplomacy 'some space', and Iran responded by suspending its own retaliatory strikes.

Analysts noted that the price action reflected the market's desperation for positive news, but warned that significant uncertainty remains. The conflict had effectively choked off the Strait of Hormuz, a critical waterway that normally carries about 20% of the world's oil and liquefied natural gas.

The market remains on edge, with no signed framework or verification mechanism in place to ensure a lasting breakthrough. Even as strikes paused, Saudi Arabia intercepted drones launched from Iran-backed militias in Iraq, and Houthi forces continued to threaten shipping in the Red Sea.