US-Iran Ceasefire Sends Oil Prices Plummeting

Oil prices plummeted over 6% on Monday after the US and Iran paused their attacks over the weekend, raising hopes of a diplomatic solution to de-escalate the conflict. Brent crude futures fell $6.20, or 6.4%, to $90.58 by 0620 GMT, while US West Texas Intermediate crude was at $83.51 a barrel, down $5.80, or 6.5%. These prices are trading at their lowest levels in nearly a week after rising for the past three weeks.

The conflict between the US and Iran has disrupted oil shipments via the Strait of Hormuz, which has reduced exports from Saudi Arabia to Asia. The US ambassador to the United Nations, Mike Waltz, stated that President Donald Trump had decided to pause US attacks to allow more time for diplomacy. ING analysts noted that the price action in oil this morning reflects the market's desperation for positive news.

Despite the pause in attacks, fewer than 10 commodity vessels passed through the Strait of Hormuz daily during the weekend, according to shipping data from Kpler. Analysts expect a slow and partial rebound in flows through the Strait of Hormuz as many shippers remain wary and want greater confidence in their safety before bringing more empty ships into the Strait.