Trump's Pause Sets Up Oil Market for Potential Rebound
Oil prices plummeted by as much as 7% on Monday after US President Donald Trump announced he was postponing an attack on Iran and backing negotiations to reopen the Strait of Hormuz.
The Brent crude benchmark pared its decline to trade 5.11% lower at $83.44 a barrel, while West Texas Intermediate fell 5.79% to $79.77.
OPEC+ added to the bearish mood by approving a September production-quota increase of 188,000 barrels a day, but this may be running ahead of events as tanker traffic remains subdued and attacks continue.
Trump's decision to cancel the strike removed part of the geopolitical premium embedded in crude, while the OPEC+ increase delivered little additional oil because exports from the Gulf, Russia, and Kazakhstan remain disrupted by the Iran and Ukraine wars.
Tony Sycamore, an IG market analyst, warned that optimism could become another 'rinse and repeat' episode as previous hopes of a settlement have faded when Iran maintained control of the strait as negotiating leverage.