Oil drops after Trump says US held ‘productive’ talks with Iran

• US president pauses attack plan for five days
• Trump: US and Iran had ‘very good’ discussions
• Brent down 6% after hitting intraday low of $97

Oil prices tumbled on Monday after President Donald Trump said he had postponed all planned US strikes on Iranian power plants.

Trump said in a post on his Truth Social platform that the US and Iran had been engaged in “very good and productive conversations” to end the deepening conflict conclusively.

Brent crude was down 6 percent at $105 per barrel as of 12:02 GMT, having touched an intraday low of $97.

Trump’s statement said he had instructed the US military to pause its attack plans for five days “subject to the success of the ongoing meetings and discussions”.

This contrasts with Trump’s threats on Saturday giving Iran a 48-hour deadline to reopen the Strait of Hormuz, through which about one-fifth of global oil and liquefied natural gas (LNG) supplies would normally transit.

Failure to do so would lead the US to “obliterate” Iran’s power plants, Trump said. In response, Iran said it would retaliate with similar strikes on water and electricity facilities in the Gulf.

Iran’s foreign ministry denied the country was in negotiations with the US, saying Trump’s comments “are within the framework of efforts to reduce energy prices and gain time to implement his military plans”, Iran’s Mehr news agency reported.

The escalating US-Israeli war on Iran, which began on February 28, had propelled oil to four-year highs near $120 a barrel, sending US gasoline prices soaring. West Texas Intermediate, the North American crude benchmark, was down 5 percent at $93 a barrel as of 12:04 GMT.

“Markets have become very crowded in terms of speculators,” said Robin Bhar, an independent commodities analyst. “Whenever there’s speculative froth, there will be these outsized moves that bear little relation to what’s actually happening. [Prices] tend to overreact.”

He described Trump’s Monday statement as good news, providing it first leads to a ceasefire and ultimately a longer-term resolution that would enable a reopening of the strait and for damaged energy facilities to be repaired.

“Trump could easily change his mind later this afternoon or tomorrow, so we’ve got to take it with a large pinch of salt,” Bhar said.

Iran has closed the waterway to most maritime traffic, including oil and gas shipments from Gulf exporters.

Commenting on social media platform X a few minutes before Trump’s statement, Oman’s foreign minister, Badr Albusaidi, said the war was not of Iran’s making and that his country “is working intensively to put in place safe passage arrangements for the Strait of Hormuz”.

At least 40 Middle East energy facilities have been “severely or very severely damaged” in the war, the International Energy Agency (IEA) estimates. These include Qatari and Iranian gas fields.

The destruction means it will take some time for oilfields, refineries and pipelines to come back to their normal capacity, IEA executive director Fatih Birol said in a speech.

Further reading:

• Dozens of energy assets ‘severely’ damaged during Iran conflict
• Aramco oil exports spike after shift to Red Sea ports
• Oil seeps from the strait but returning full flow is far from easy

The prospect of Iran striking water desalination and power plants weighed on UAE stock markets, which ceased Monday trading prior to Trump’s statement.

Dubai’s index fell 3 percent to 5,386 points. This drop wiped out most of its gains from last week’s slight rebound and took its losses this month to 17 percent.

Abu Dhabi’s measure dipped 1.5 percent to 9,423 points. It is down nearly 10 percent since the Iran war started. Other Gulf bourses were closed for the Eid Al-Fitr holidays.