Oil falls more than 5% after US backs away from striking Iran

Oil prices dropped sharply during Monday's trading after US President Donald Trump announced that the United States would not proceed with a new military strike against Iran.

Trump said the decision was intended to intensify diplomatic efforts aimed at reaching a swift agreement that would curb Tehran's nuclear ambitions and lead to the reopening of the Strait of Hormuz to commercial shipping.

In trading, Brent crude futures fell 5.7% to $82.90 per barrel as of 13:09 GMT, while US West Texas Intermediate (WTI) crude declined 6.5% to $79.10 per barrel.

Both benchmarks recorded their largest single-day declines in both dollar terms and percentage terms since the previous Monday.

The two contracts had surged more than 20% over the past month as renewed military clashes between the United States and Iran, together with attacks on several oil tankers off the coast of Oman, heightened security concerns and prompted many shipping companies to avoid entering the Gulf to load crude.

Trump steps back

Late on Saturday, Trump said on his Truth Social platform that Iran and several other Middle Eastern countries had requested additional time to finalize an agreement that would lead to the "immediate, complete, and full reopening" of the Strait of Hormuz and bring an end to what he described as the Iranian nuclear threat. Details of the proposed agreement have not yet been disclosed.

Shipping data showed that two tankers carrying Saudi crude successfully transited the Bab el-Mandeb Strait from the Red Sea over the weekend. However, vessel traffic through both the Strait of Hormuz and the Bab el-Mandeb remained slower than usual.

OPEC+ production

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) and its allies in the OPEC+ alliance agreed on Sunday to increase oil production quotas by approximately 188,000 barrels per day starting in September.