Oil prices dropped sharply on Monday, falling 5% after the United States and Iran agreed to pause military strikes, according to Business News Nigeria.
The decline follows a halt in attacks between the two countries, a move that analysts say reduces the immediate risk of supply disruptions in the Middle East. Brent crude fell to $92 a barrel, as reported by Channels Television, while Dow futures rallied 500 points on the news, according to CNBC.
The truce revived hopes that the Strait of Hormuz, a critical chokepoint for global oil shipments, could reopen for normal traffic. The strait had been effectively closed in recent weeks due to the conflict, pushing prices higher. The US signaled that the pause in strikes would allow diplomatic talks to progress, CNN reported.
Market reaction was swift, with investors betting that a sustained halt to hostilities would ease fears of a prolonged war that could cut off significant oil supplies. The BBC also reported the price dive, noting the pause in attacks as the key catalyst.
The next focus for traders will be whether the truce holds and leads to a formal reopening of the Strait of Hormuz, which would likely push prices lower.
