Oil prices experienced a significant decline on Sunday as military operations between the United States and Iran entered a pause. Brent crude, the international benchmark, fell approximately 5.7% to about $91.30 a barrel, while US crude was down about 5.4% to $84.43 a barrel. This comes after Brent crude had climbed around 27% in the past two weeks due to escalated US-Iran clashes, closing at $96.78 a barrel on Friday.
Despite the pause in strikes, gas prices in the US have ticked higher, with the average price for a gallon reaching $4.11 this weekend, according to AAA. This represents an 11-cent increase from a week ago and is 38% higher since the war began in late February. The disruption to the Strait of Hormuz, which accounts for about 20% of global oil supply flows, and the Bab al-Mandeb Strait, have impacted oil trade, with Kpler, a global commodities analytics firm, expecting the Strait of Hormuz to remain closed until 2027.
In broader market reactions, Nasdaq futures gained 1.2%, Dow Jones futures gained 0.6%, and S&P 500 futures rose 0.7%. Diplomatic efforts are underway, with Iran and Oman holding talks about controlling the Strait of Hormuz. A regional official involved in mediation noted concerted diplomacy and a pause in US strikes, while a US official indicated that President Trump prefers diplomacy, with ongoing negotiations aiming for a compromise regarding vessel transit through the Strait of Hormuz.
