Crude oil prices collapsed in Monday trading, with West Texas Intermediate and Brent futures falling more than 4% as investors rapidly unwound geopolitical risk premiums.
The sharp sell-off followed confirmation that US President Donald Trump had called off a planned military strike on Iran, effectively halting the immediate threat of kinetic conflict in the region.
The market reaction was swift and decisive, wiping out gains accumulated over the previous week as traders reassessed the probability of a supply disruption in the Strait of Hormuz.
The move underscores how heavily the market had priced in the risk of a US-Iran confrontation, with the cancellation of the strike removing the primary catalyst for elevated energy prices.
This development marks a significant pivot from the escalating rhetoric that had dominated headlines in recent days.
Earlier this week, Iran had warned of a forceful response to tankers deviating from approved routes, while Oman’s diplomatic opacity on Hormuz fees had further deepened uncertainty around shipping risks. The US decision to stand down appears to have been influenced by appeals from key Middle Eastern leaders, offering a temporary reprieve for global energy markets.