Despite the oil price drop, analysts warned that the situation in the Strait of Hormuz is still fragile (US Marine Corps photo by Lance Cpl. Mackenzie Binion)
Global oil prices fell by more than 5% on Sunday after the United States and Iran paused their recent exchange of strikes, raising hopes that tensions in the Strait of Hormuz may ease.
Brent crude, the global oil benchmark, dropped to $91.87 per barrel after climbing above $100 during two weeks of conflict.
US Ambassador to the United Nations Mike Waltz said President Donald Trump was giving diplomatic talks more time before deciding on any further military action.
Despite the price drop, analysts warned that the situation is still fragile. The Strait of Hormuz, a vital shipping route that normally carries about 20% of the world’s oil and gas, remains largely disrupted.
Ongoing security risks in the Strait and rising tensions involving Yemen’s Houthis could continue to disrupt global oil supplies.
Higher fuel prices have also pushed US inflation higher. Investors expect the Federal Reserve to keep interest rates unchanged for now.
Meanwhile, gold prices climbed as the US paused military action against Iran, easing inflation fears. Lower oil prices and expectations that the Fed may hold interest rates boosted demand for the precious metal.