Oil Prices Fall Sharply on Peace Hope, China Cuts Imports by 50%
Oil prices fell nearly 6% on Monday after US President Donald Trump paused strikes on Iran following two weeks of attacks, raising hopes for a diplomatic solution to the conflict.
The International Energy Agency (IEA) hinted that a 50% reduction in China’s imports during the US-Iran war has cushioned the effect of high energy costs across the markets.
Brent crude traded at $86.38 per barrel, down 5.78% from the previous close of $91.68. US benchmark West Texas Intermediate (WTI) fell 6.3% to $83.69 per barrel, compared with $89.31 in the previous session.
Brent crude briefly climbed to $100 a barrel last week amid concerns that disruptions to shipping through the Strait of Hormuz and the Bab el-Mandeb Strait could affect crude exports from the Middle East.
However, prices retreated after Trump paused strikes on Iran, easing the war risk premium that had driven last week’s gains. Trump directed the military not to launch new strikes on Iran on Friday, ending nearly two weeks of daily attacks, Axios reported on Saturday, citing sources familiar with the decision.
The decision suggests Trump wants to allow more room for diplomacy and believes the current level of US strikes has reached its practical limit without expanding into major combat, according to the report.
The move raised hopes for renewed diplomacy, although Iranian Foreign Ministry spokesman Esmaeil Baqaei told Austria’s ORF television on Sunday that conditions for negotiations remain absent and accused Washington of undermining diplomacy through its military actions.
CNN also reported that US Vice President JD Vance and the country’s top military general had urged Trump to avoid a major escalation in the conflict during a high-level meeting on Friday.
Despite signs of de-escalation, markets remained cautious as risks to shipping through the Strait of Hormuz and the Bab el-Mandeb Strait persisted
In a statement last week, IEA Executive Director Fatih Birol noted that crude oil and gas markets have continued to benefit from several cushioning factors.
These include significant supplies from Gulf producers – notably through major efforts by Saudi Arabia and the United Arab Emirates – that have continued to reach global markets via various routes.
In addition, oil producers in other regions – notably the United States, Brazil, Venezuela and Kazakhstan – have increased exports, helping offset some of the supply losses.
On the demand side, China has played an important role in stabilising markets by reducing its crude oil imports by nearly 50% compared with pre-war levels. #Oil Prices Fall Sharply on Peace Hope, China Cuts Imports by 50%# Oil Prices Surge, Brent Tops $90 on Heightened Supply Risk
