Oil Prices Plunge Over 10% as Trump Pauses Strikes on Iran, Easing Supply Concerns

Oil prices fell sharply on Monday, with both WTI and Brent crude posting double-digit losses, after U.S. President Donald Trump signaled a potential de-escalation in tensions with Iran.

WTI crude dropped more than 10% to around $88.5 per barrel, while Brent crude declined by a similar margin to near $100 per barrel, as markets reacted to a sudden shift in geopolitical risk.

The move followed Trump’s announcement of a five-day pause on planned U.S. strikes targeting Iranian energy infrastructure, a decision he linked to what he described as “constructive” discussions with Tehran over the past two days. Talks are expected to continue later this week.

The development eased immediate concerns over supply disruptions, particularly those tied to the Strait of Hormuz-a critical chokepoint through which a significant share of global oil flows.

In recent weeks, markets had priced in elevated risk premiums amid escalating tensions and a U.S. deadline for Iran to reopen the waterway. The pause in military action has temporarily reduced the likelihood of further damage to energy infrastructure, prompting a rapid unwind of those risk premiums.

Still, the outlook remains uncertain.

Market participants are now closely watching whether diplomatic efforts can translate into a sustained reopening of the Strait of Hormuz and a broader stabilization of regional energy flows. Any reversal in negotiations could quickly reintroduce volatility into oil markets.

EcoPulse24 Analysis

The sharp drop in oil prices reflects not a change in underlying supply fundamentals, but a repricing of geopolitical risk.

Over the past weeks, crude markets had incorporated a significant risk premium tied to potential disruptions in the Gulf. Trump’s decision to pause strikes effectively removed part of that premium in a single move, triggering a rapid correction.

However, the structural risks remain intact.

As long as the Strait of Hormuz remains vulnerable and regional tensions unresolved, oil markets are likely to stay highly sensitive to political signals. The current decline may prove temporary if diplomatic momentum fails to hold.