Oil prices tumbled over 5% on Sunday amid continued turmoil in the Persian Gulf, a direct response to the apparent pause in military operations between the United States and Iran. Brent crude, the international benchmark, fell about 5.7% to approximately $91.30 a barrel, while US crude was down about 5.4% to $84.43 a barrel. This marked a sharp reversal from earlier trends, where the conflict had driven gas prices higher, with the average price for a gallon in the United States reaching $4.11 this weekend, up about 11 cents from a week ago and 38% higher since the war began in late February.
The de-escalation comes as the US military has reportedly paused airstrikes, allowing for ongoing diplomatic discussions. Both the US and Iran are looking to return to an interim ceasefire deal, with negotiations centering on Iran running vessel transit through the Strait of Hormuz with fewer restrictions. Iranian Foreign Ministry spokesperson Esmail Baghaei confirmed that Iran and Oman held several rounds of technical talks about the strait over the weekend, with progress being made.
Despite the positive developments on the diplomatic front, the financial markets reacted strongly to the news. While oil prices fell, stock market futures saw gains. Nasdaq futures gained 1.2%, Dow Jones futures gained 0.6%, and S&P 500 futures rose 0.7%. The Strait of Hormuz, which accounts for about 20% of global oil supply flows, had seen a slowdown in traffic due to renewed fighting, and its potential reopening or eased restrictions are key to stabilizing the oil market.
US President Donald Trump paused attacks to give talks "some space" for diplomacy, as stated by American envoy to the UN Mike Waltz. Waltz also indicated that all options remain on the table and that talks are continuing at the highest level. The swift market reaction underscores the sensitivity of global energy markets to geopolitical stability in the Middle East.
