Oil Prices Slide as US-Iran Pause Hostilities

Brent crude falls 6% as easing tensions reduce fears of supply disruptions

Oil prices fell sharply on Monday as a temporary pause in hostilities between the United States and Iran eased concerns over further escalation in the Middle East, while global stock markets mostly opened the week higher amid a busy schedule of corporate earnings and central bank decisions.

International benchmark Brent crude dropped around 6% to about $86 a barrel after Washington and Tehran stepped back from their recent exchange of attacks, providing relief for Gulf shipping routes and the global energy sector.

A US envoy to the United Nations said President Donald Trump was “giving talks some space” as diplomatic efforts continued.

Tensions between the two countries had intensified earlier this month after Iran targeted vessels travelling through Omani waters in the Strait of Hormuz, ending a fragile ceasefire and triggering a cycle of retaliatory actions.

The escalation pushed crude prices sharply higher, with Brent briefly climbing above $100 a barrel last week for the first time since May.

“Although the situation in the Middle East has calmed, it has not been resolved, and it could make a decline below $85 per barrel tricky at this stage,” said Kathleen Brooks, research director at XTB trading group.

David Morrison of Trade Nation said investors were hoping the pause in fighting could pave the way for renewed peace negotiations.

The calmer geopolitical environment eased concerns over a new wave of inflation driven by energy prices and reduced fears of additional interest rate increases, helping support equity markets at the start of trading.

However, early gains on Wall Street faded, with only the Dow Jones Industrial Average remaining in positive territory during late-morning trading. Technology stocks continued to weigh on the Nasdaq Composite.

“When a calming of Middle Eastern hostilities fails to provoke a major up day in stocks, you know there is more trouble ahead,” said Chris Beauchamp, chief market analyst at IG.

He added that investors used the early market recovery as an opportunity to reduce exposure to struggling technology shares, highlighting a decline of more than 5% in artificial intelligence chip giant Nvidia.

European markets ended higher, with Frankfurt gaining 1%, while London and Paris also recorded gains.

Central Banks in Focus

Investors are closely watching upcoming decisions from major central banks. The US Federal Reserve is widely expected to keep interest rates unchanged on Wednesday, followed by the Bank of England on Thursday.

“Policymakers face a difficult trade-off between evidence that inflation had been moderating and growing signs that higher oil prices could create a more persistent inflation shock,” said Jim Reid, managing director at Deutsche Bank.

Asian markets also advanced, with Tokyo, Seoul, Hong Kong and Shanghai all closing higher.

Earnings Season Drives Market Sentiment

Markets are also preparing for a major week of corporate earnings, with investors focusing on company outlooks and spending plans.

South Korean chipmakers SK hynix and Samsung, along with Japan’s Kioxia, are expected to report results, while major US technology firms including Microsoft, Meta, Apple and Amazon are scheduled to release updates.

Meanwhile, Chinese memory chipmaker CXMT made a dramatic debut on the Shanghai stock market, with its shares soaring more than 500% before closing 465% higher.

The surge followed the Anhui-based company’s $9.8 billion initial public offering, making it the largest mainland technology share sale in China, according to Bloomberg News.