Global oil prices dropped sharply on Monday after US President Donald Trump said Washington was holding “good talks” with Iran, raising hopes of a diplomatic breakthrough following the suspension of a two-week bombing campaign against the country.
Brent crude, the international benchmark, fell by about 8.2% to below $90 per barrel, dropping as low as $87.55 during trading. The decline follows a spike above $100 per barrel last week amid escalating tensions in the Middle East.
Trump said there was a good chance of reaching an agreement with Tehran but warned that the US would resume military action if talks failed. He said negotiations were ongoing and productive, adding that if no agreement is reached, the US would return to its previous approach.
The comments came days after Washington suspended air strikes on Iran on Saturday, following 13 consecutive nights of bombing.
Despite the more optimistic tone, tensions across the region remained elevated. Saudi Arabia said it intercepted drones targeting petroleum facilities, including sites in Riyadh, which it said were launched from Iraq by Iran-backed armed groups. The kingdom said it reserved the right to respond.
Iran-backed Houthi rebels in Yemen also claimed responsibility for an attack on Saudi Arabia’s East-West Pipeline, which carries crude oil to the Red Sea port of Yanbu, saying it was retaliation for alleged Saudi drone incursions into Yemeni airspace.
Iran, meanwhile, denied that it had requested a resumption of talks with the United States. A Foreign Ministry spokesman rejected reports suggesting Tehran had sought negotiations, saying such claims were false, while noting that communication through mediators was ongoing and that Iran remained open to diplomacy.
Tehran also said it continued to control the Strait of Hormuz, a key global shipping route through which roughly a fifth of the world’s oil supply passes, despite US demands that vessels be allowed to transit freely. Iranian state media reported that authorities turned back six ships on Monday for attempting to pass through the strait without permission.
Reports suggest Trump’s decision to halt the bombing campaign followed advice from senior military commanders, who reportedly determined that the strikes had achieved as much as they could, citing a shrinking list of targets and depleting munitions.
Analysts say the sharp drop in oil prices could offer relief to oil-importing countries if it holds, but cautioned that markets remain vulnerable to renewed volatility should the ceasefire break down.
