Oil benchmark prices tumbled in Asian trading on Monday, retreating to three-week lows after U.S. President Donald Trump announced he had called off a planned military strike on Iran and said negotiations with Tehran would resume later the same day.
At 20:46 ET (00:46 GMT), Brent crude futures for October delivery were down 4.8% at $83.68 per barrel, while West Texas Intermediate crude futures lost 4.9% to trade at $80.50 per barrel. Both contracts had slipped by more than 5% over the previous week, though they recorded a monthly gain of over 20% in July.
The pullback followed Mr. Trump's statement on Sunday that a large-scale U.S. military strike had been called off after Iran and several Middle Eastern countries requested time for negotiations. He said the talks would start Monday and were intended to focus on reopening the Strait of Hormuz and securing a commitment from Iran to abandon its nuclear ambitions.
Prices had surged briefly last week as the conflict expanded beyond the Gulf, raising concerns about broader interruptions to regional energy infrastructure and maritime transit. Iran-backed groups carried out drone attacks on Saudi oil facilities, while strikes struck natural gas vessels at Egypt's Damietta port. Shipping lanes in both the Strait of Hormuz and the Red Sea were targeted, prompting worries that the confrontation was extending to multiple energy transit chokepoints. That escalation had briefly pushed Brent crude above $90 a barrel.
The decline in crude was further supported by a decision from OPEC+ on Sunday to raise member production quotas by about 188,000 barrels per day beginning in September. That move completed the removal of a layer of voluntary output cuts introduced in 2023.
While earlier quota increases had little effect because of supply disruptions in Iran, Russia and Kazakhstan, the latest adjustment indicated that the producer group remained committed to gradually restoring output as geopolitical risks appeared to moderate.
Key market drivers in this episode include the U.S. decision to halt a military action against Iran and the OPEC+ quota increase, both of which contributed to downward pressure on prices after a period of supply-related volatility and regional attacks that had previously tightened markets.