US Pauses Iran Strikes, Oil Prices Plummet to 7-Day Low

Oil prices plummeted on Monday, dropping to their lowest levels in over a week, as the US suspended its campaign of air strikes against Iran. The move has raised hopes for a diplomatic solution that would allow shipping to resume in the Strait of Hormuz.

Brent crude futures fell $8.42, or 8.7%, to settle at $88.36 a barrel, while U.S. West Texas Intermediate crude futures dropped $6.70, or 7.5%, to close at $82.61. The prices are the lowest since July 17 and July 16, respectively.

The US ambassador to the United Nations, Mike Waltz, said President Donald Trump had decided to pause US attacks to allow more time for diplomacy. Trump also stated that there's a good chance of a potential deal with Iran and threatened strong military action if diplomacy fails.

Industry analysts expect oil markets to remain highly volatile in response to updates around the unofficial ceasefire between the US and Iran. The physical flow of oil remains constrained, despite the truce, as shipping volumes are heavily depressed after a brief mid-June ceasefire.