Brent crude futures for October delivery fell sharply in early Asian trading, dropping as much as 7.3% after US President Donald Trump announced the cancellation of a planned military strike on Iran.
The president stated that new negotiations with Tehran would commence on Monday, signaling a pivot from military escalation to diplomatic engagement.
The steep decline in oil prices marks a dramatic reversal of sentiment following a volatile July, during which Brent futures surged nearly 25%—their largest monthly gain since March.
The steep decline in oil prices marks a dramatic reversal of sentiment following a volatile July, during which Brent futures surged nearly 25%—their largest monthly gain since March.
Markets had priced in significant supply disruption risks amid fears of a direct US military intervention in the Strait of Hormuz region.
The decision to hold off on the attack has rapidly unwound that risk premium, with traders reassessing the likelihood of immediate physical supply constraints.
This development follows a period of heightened geopolitical tension that had driven energy markets higher.