Oil prices dropped sharply during early Asian trading on Monday after US President Donald Trump announced fresh negotiations with Iran. Meanwhile, Iran said it was close to reaching an agreement with Oman on a new route through the Strait of Hormuz.
The renewed diplomatic efforts raised hopes of easing tensions in the Middle East. As a result, investors reacted by selling oil, causing benchmark crude prices to decline significantly.
The conflict began in late February after the United States and Israel launched attacks on Iran. Consequently, the war disrupted global energy markets and effectively closed the Strait of Hormuz. The strategic waterway remains a vital route for international oil and gas shipments.
Trump Announces New Round Of Iran Negotiations
At around 2250 GMT on Sunday, Brent crude for September delivery fell 4.69 percent. The international benchmark traded at $83.81 per barrel during early Asian trading.
Similarly, US benchmark West Texas Intermediate declined 4.67 percent to $80.72 per barrel.
Trump announced that fresh negotiations with Iran would begin on Monday. Furthermore, he said Washington had delayed major military strikes to pursue a diplomatic agreement instead.
“Now what we’re doing is we’re talking to them in the form of a negotiation,” Trump said. However, he did not disclose the location or participants of the planned talks.
Iran Signals Progress On Hormuz Route Agreement
Meanwhile, Iran said it was nearing an agreement with Oman regarding a new route through the Strait of Hormuz. The announcement came only hours after the United States called off planned major strikes.
The proposed arrangement could help restore shipping through the crucial waterway. Therefore, markets responded positively to expectations of reduced regional tensions and improved energy supplies.
