Oil Prices Plummet on Trump's Iran Pause

Oil prices plummeted by as much as 7% on Monday after US President Donald Trump announced he would pause an attack on Iran and back negotiations to reopen the Strait of Hormuz.

The decision encouraged traders to remove some of the geopolitical premium embedded in crude, but tanker traffic remains subdued and attacks continue. Despite a 5.11% decline in Brent crude to $83.44 a barrel, analysts warn that the supply disruption has not been resolved.

OPEC+ added to the bearish mood by approving a September production-quota increase of 188,000 barrels a day, but this may not translate into more available barrels due to shipping disruptions.

According to JPMorgan, every additional month of interrupted supply could add $7 to $8 per barrel to Brent, while Goldman Sachs has outlined a scenario in which continued Hormuz disruption pushes Brent towards $120.