Oil prices posted their steepest daily decline in weeks on Monday after President Donald Trump postponed a planned military strike against Iran, prompting investors to scale back concerns over an immediate escalation of the conflict that has driven energy markets higher throughout recent months.

Brent crude futures fell $4.19, or 4.8%, to $83.74 per barrel, while U.S. West Texas Intermediate (WTI) crude declined $4.92, or 5.8%, to $79.75 per barrel. The decline placed Brent on track for its lowest settlement since mid-July, aided in part by the transition from the September futures contract to the lower-priced October contract.

Diplomatic Hopes Trigger Broad Oil Selloff

Investor sentiment shifted after Trump said he had decided against launching another attack on Iran, citing expectations that negotiations between Washington and Tehran would soon begin.

However, Iranian officials quickly rejected that claim.

Iranian Foreign Ministry spokesman Esmail Baghaei stated that no discussions with the United States were underway and that there were no scheduled meetings or plans to send negotiators abroad. The conflicting statements created uncertainty but nevertheless encouraged traders to reduce geopolitical risk premiums that had been built into oil prices.

Analysts at Ritterbusch and Associates described the market reaction as another example of investors responding aggressively to Trump’s shifting rhetoric.

The firm noted that the president has repeatedly announced potential military action before reversing course, creating sharp swings in crude prices and limiting sustained upward momentum in gasoline and oil markets.

Trump also renewed calls for American oil companies to lower fuel prices, publicly criticizing Chevron CEO Mike Wirth and urging producers to pass lower energy costs on to consumers.

Middle East Shipping Risks Persist

Although oil prices declined, risks to global supply chains remain elevated.

Shipping data showed that six Saudi-flagged supertankers recently altered their routes, choosing to sail around southern Africa rather than transit the Gulf of Aden after renewed threats from Yemen’s Iran-backed Houthi movement against Saudi-linked vessels.

At the same time, two Saudi oil tankers successfully crossed the Bab el-Mandeb Strait over the weekend, while vessel traffic through the Strait of Hormuz remained slower than normal following reports of attacks on commercial ships.

Before the current conflict began, approximately one-fifth of global oil and liquefied natural gas shipments passed through the Strait of Hormuz, making it one of the world’s most strategically important energy corridors.

Russia and Iraq Continue Adjusting Export Operations

Energy logistics remain under pressure beyond the Gulf region.

A Panama-flagged tanker transporting Russian naphtha reportedly abandoned plans to transit the Bab el-Mandeb Strait before rerouting around Africa, highlighting ongoing concerns over maritime security.

Russia also announced new measures to strengthen protection for vessels operating in the Azov-Black Sea basin following intensified drone attacks linked to the conflict in Ukraine. Authorities said they are also developing alternative transport routes to maintain export flows.

Meanwhile, Iraq reported exporting approximately 42 million barrels of crude oil during July, including shipments from southern ports and through Turkey’s Ceyhan export terminal.

OPEC+ Supply Increases Face External Challenges

The recent disruptions across the Middle East and Eastern Europe have limited the impact of OPEC+’s efforts to increase production.

The producer alliance approved another output increase of approximately 188,000 barrels per day beginning in September. However, continuing supply disruptions affecting Gulf exporters, Russia and Kazakhstan have prevented much of those additional barrels from reaching global markets.

Analysts note that while OPEC+ continues to raise production quotas, geopolitical risks remain the dominant force influencing oil prices.

Outlook

Monday’s sharp decline reflects easing fears of an immediate military escalation rather than a resolution of broader geopolitical tensions. Conflicting messages from Washington and Tehran, continued threats to vital shipping lanes, disruptions to Russian export routes, and OPEC+’s gradual production increases suggest that oil markets are likely to remain highly volatile. Investors will continue monitoring diplomatic developments between the United States and Iran, along with security conditions across the Strait of Hormuz and Red Sea, for signs of either renewed supply risks or lasting market stabilization.