Trump's Iran Deal Signals: Oil Prices Plunge Amid Tensions

Oil prices plummeted on Monday after US President Donald Trump signaled a willingness to pursue a quick agreement aimed at ending Iran's nuclear ambitions and reopening the Strait of Hormuz. Brent crude futures fell $4.37, or 5%, to $83.56 a barrel, while U.S. West Texas Intermediate crude declined $4.63, or 5.5%, to $80 a barrel.

The sharp decline followed a strong rally last month, when both contracts had gained more than 20% after fighting between the US and Iran resumed. Concerns over attacks on several tankers near Oman also heightened security risks, discouraging shippers from entering the Gulf to load crude.

Analysts are hopeful that tensions in the Middle East will eventually ease, but warn of potential supply disruptions and shipping problems. JPMorgan estimates that every additional month of disruption could lift Brent prices by about $7 to $8 a barrel, while Goldman Sachs has warned that Brent could rise to $120 a barrel if shipping disruptions continue.

OPEC+ approved an increase of around 188,000 barrels per day in its oil production quota for September, but the additional supply has had little effect on the market so far. Export disruptions from the Gulf, along with supply issues involving Russia and Kazakhstan amid the Iran and Ukraine wars, have meant that the group's successive monthly production hikes for most of this year have largely remained on paper.