WASHINGTON (dpa-AFX) - Crude oil prices have gone into a tailspin on Monday, extending the losses from Friday's plunge after the U.S. halted nearly two weeks of military attacks against Iran following which near-term oil supply-disruption concerns reduced.
WTI Crude Oil for September month delivery was last seen trading down by $7.09 (or 7.94%) at $82.22 per barrel.
The Middle East conflict that erupted after U.S.-Israeli forces attacked Iran on February 28 led to the closure of the Strait of Hormuz by Iran.
On June 17, the U.S. and Iran agreed to halt their mutual attacks for a 60-day period and then Iran reopened the strait.
However, in less than 30 days, after Iran fired at a few vessels transiting through the strait, U.S. forces restarted aerial attacks on Iran.
Countering the attacks, Iran targeted U.S. bases in neighboring Arab nations and once again closed the Strait of Hormuz.
Since then, despite attempts by regional intermediaries to bring both nations to pursue diplomacy, the U.S. and Iran traded attacks. As a consequence, oil prices kept moving higher.
For the past two weeks, U.S. forces intensified the strikes on Iran.
U.S. President Donald Trump stated that he was planning a massive strike against Iran on a scale never seen before.
A few hours later, citing two sources, Axios reported that U.S. military commander in the Middle East Admiral Brad Cooper suggested to the U.S. administration to halt the military campaign in the Strait of Hormuz region since the offensive has reached its peak limits.
Along with Cooper, other advisers recommended to Trump that a majority of targets in Iran have already been destroyed by the U.S. forces, disabling Iran from carrying out any future strikes on vessels traveling through Strait of Hormuz.
In addition, Chairman of the Joint Chiefs of Staff General Dan Caine warned Trump and U.S. Defense Secretary Pete Hegseth about the shortage of air defense interceptors due to which U.S. forces could face challenges in protecting itself or the U.S. allies.
Following this, Trump ordered the U.S. military to hold back further fire.
Yesterday, in an interview with NBC, U.S. ambassador to the U.N., Mike Waltz stated that Trump preferred to give talks with Iran some space.
Striking a different tone, a spokesperson for Iran's Foreign Ministry Esmaeil Baghaei Hamaneh stated that Iran is in negotiations with Oman regarding the management of the shipping traffic across the Strait of Hormuz but stressed that Iran is not involved in talks with the U.S.
Despite the lack of clarity on the trajectory of direct or indirect U.S.-Iran talks, the absence of attacks after early warnings of a massive attack by Trump has largely eased Middle East tensions.
Today, on his way to Michigan, Trump stated that he had plenty of time to deal with Iran and acknowledged that talks with Iran are going on. Sounding optimistic, Trump stated that there is a good chance that something positive could happen.
Investors cheered the pause in the hostilities and oil prices went for a freefall today.
Last week, citing sources Reuters reported that at the upcoming August 2 meeting, the Organization of Petroleum Exporting Countries is planning to approve another target hike of nearly 188,000 barrels per day for the month of September.
The increase matches the OPEC cartel's previous targets for June, July, and August. If formally endorsed, the hike would fully unwind the voluntary production cuts agreed in 2023 by the alliance.
Energy experts are focused on the upcoming interest rate decision by the Federal Open Market Committee on Wednesday.
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