Trump's Last-Minute U-Turn Sends Oil Prices into Freefall

Oil prices plummeted by as much as 5% on Monday after US President Donald Trump announced he was calling off planned strikes on Iran, opting instead for negotiations towards a peace deal. The price of Brent crude fell to $83.50 per barrel, while US West Texas Intermediate dropped more than $5 to $79.47 per barrel.

Trump's decision came after Iran and other Middle Eastern countries requested time to complete a deal that would lead to the immediate reopening of the Strait of Hormuz and an end to Iran's nuclear threat. Trump stated that talks with Tehran would start on Monday, sparking hope for a resolution to the ongoing conflict.

Kathleen Brooks, research director at XTB, believes the drop in oil prices will ease inflation fears and dampen bond yields. However, Tony Sycamore from IG warned that hopes of a deal may collapse if Iran continues to leverage its control over the Strait, potentially through an attack on a US base or a tanker transiting the waterway.