Oil Prices Plummet on Trump's Iran U-Turn

Oil prices plummeted nearly 5% on Monday after US President Donald Trump called off a planned military attack on Iran, sparking hopes for a diplomatic breakthrough and the possible reopening of the Strait of Hormuz.

The decline in oil prices comes despite the ongoing blockade of Iranian ports by the US Navy, which has forced 35 ships to turn back. However, traders are now pricing in the possibility that the escalation could eventually ease rather than develop into a prolonged disruption of Middle Eastern oil supplies.

West Texas Intermediate crude fell $4.15, or 4.90%, to trade at $80.52 a barrel, while Brent crude dropped $4.08, or 4.64%, to $83.85 per barrel, according to market data.

The sharp reversal in oil prices represents a significant shift from the recent rally, which was driven by escalating US-Iran tensions and disruptions around the Gulf. The OPEC+ decision to increase production by about 188,000 barrels per day starting in September is also weighing on prices.