Oil prices crash 7% as US and Iran pause strikes, Brent below $90

Oil markets plunge on de-escalation news

Global crude oil prices crashed on Monday after the United States and Iran agreed to pause military strikes, sending Brent crude below $90 a barrel for the first time in weeks. The benchmark tumbled nearly 7% in early trading, marking the sharpest single-day drop this year.

West Texas Intermediate (WTI), the US benchmark, also saw heavy losses, falling over 6% as traders rushed to price in a lower risk premium. The sudden slide comes after weeks of escalating tensions in the Middle East that had pushed oil above $95.

The pause in hostilities, confirmed by officials from both nations, has removed the immediate threat of supply disruptions from the Strait of Hormuz. Analysts had warned that a full-blown conflict could choke off nearly a fifth of global oil flows.

Stock markets mixed as oil slump reshuffles sectors

On Wall Street, major indices ended the session in conflicting directions. The Dow Jones Industrial Average climbed over 200 points, boosted by airlines and transport stocks that benefit from lower fuel costs. United Airlines and Delta Air Lines both gained more than 3%.

The Nasdaq Composite, however, slipped as chip stocks dragged down the tech-heavy index. Investors rotated out of high-growth names and into sectors that thrive when energy prices ease. The S&P 500 was flat, caught between energy sector losses and consumer stock gains.

Energy majors bore the brunt of the selloff. Exxon Mobil and Chevron each lost over 4%, while smaller oil producers saw double-digit percentage drops. Traders bet that lower crude prices would squeeze margins for drillers and refiners.

What triggered the sudden turnaround

Diplomatic channels opened over the weekend, leading to a mutual agreement to halt airstrikes and naval patrols in the Gulf region. Neither side has disclosed the terms of the pause, but both called it a “step toward de-escalation.”

Oil markets had been pricing in a high probability of extended conflict since early July. The reversal caught many commodity traders off guard, triggering stop-loss orders and amplifying the selloff. Trading volumes on crude futures were more than double the 30-day average.

The drop in oil prices also pulled down gasoline and diesel futures, offering potential relief for consumers ahead of the peak summer driving season in the US and Europe.

What to watch next

Markets will now focus on whether the pause can hold and lead to broader negotiations. Any signs of renewed hostilities could quickly reverse Monday’s gains. The next major trigger will be official statements from Tehran and Washington in the coming days.