Oil prices slide nearly 5% after Trump announces new Iran talks and holds off strikes

Oil prices fell sharply at the Asian open after US President Donald Trump said new negotiations with Iran would begin on Monday and that he had held off on planned strikes. On Sunday evening, Brent North Sea for September delivery was down 4.69 percent at $83.81 a barrel, according to AFP.

Trump announces talks, pauses strikes

Trump told reporters on Sunday that the new negotiations would cover the Strait of Hormuz and “ultimately, the denuclearization of Iran.” He said the talks would begin “tomorrow afternoon” and made the comments aboard Air Force One. The president said he had been asked by Iran and by US partners Saudi Arabia, the United Arab Emirates and Qatar to hold off on strikes, which he claimed would have been “the biggest attack since World War II.”

Iranian media denied that Tehran had asked Trump not to strike.

Hormuz, maritime routes and regional developments

The Strait of Hormuz has been a major flashpoint during the conflict. An Iranian lawmaker, Hassan Ghashghavi, said mediators were trying to revive a US-Iran memorandum of understanding agreed in June and that “the main issue and, in fact, the key to the matter right now is the issue of the Strait of Hormuz, so yes, there is an exchange of views.”

Iranian foreign ministry spokesman Esmaeil Baqaei told state television that a deal was close with Oman over a new route through the strait. He said:

“We are now going to reach an understanding on a route acceptable to both sides – neither the northern route nor the southern route – but one that respects the sovereign rights of both sides and safeguards our national interests and security.”

He added that such an agreement did not mean the reopening of the strait.

Maritime trade tracker Kpler said traffic through Hormuz had dropped sharply. Separately, the United Kingdom Maritime Trade Operations Centre reported that a tanker off the coast of Oman had heard an explosion near the vessel on Sunday but that the vessel and crew were safe.

Market reaction and wider context

Markets responded to the prospect of renewed diplomacy by pushing international benchmark oil prices lower at the start of Asian trade. AFP reported that Washington and Tehran have been at war since February 28, when the US and Israel launched surprise strikes against Iran, and that months of on-off diplomacy had produced periods of relative calm before a return to strikes last month.

Following renewed strikes last month, concerns had risen about possible escalation. The announcement of talks and the decision to hold off on immediate strikes prompted the fall in prices reflected in the Brent contract for September delivery.