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Global oil prices dropped significantly on Monday after Donald Trump announced that planned U.S. strikes on Iran’s energy and power infrastructure would be postponed for five days amid “very good and productive” talks.
Brent crude oil prices fell by as much as 10% in early trading, later stabilising around 8% lower at just under $104 a barrel. This decrease followed a surge to $114 per barrel amid fears of escalating conflict.
The financial markets reflected this rebound. London’s FTSE 100 experienced considerable volatility, at one point dropping nearly 250 points before closing down just 8.6 points at 9,909.74.
European markets followed suit, with Germany’s DAX rising by 1.5% and France’s CAC 40 up by 1.4% after significant early losses.
Investors viewed the announcement as a potential step toward de-escalation in the U.S.-Iran conflict, raising hopes that the Strait of Hormuz—a vital passage for about one-fifth of global oil and liquefied natural gas shipments—could be reopened safely.
However, analysts warned that markets remain highly sensitive to developments in the Gulf, suggesting volatility is likely to persist until a lasting resolution is reached.
Chris Beauchamp, chief market analyst at IG, said: “Trump has sprung his usual surprise on markets, pausing strikes on energy infrastructure as a result of successful talks.
“But this leaves big questions unanswered – Hormuz remains closed, the damage to energy infrastructure is still there and it is unclear whether air strikes on other targets will continue.
“While this was the headline investors have been hoping for, the fact that Brent has rebounded back above 100 dollars shows that markets remain sceptical.”
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