Shafaq News

Oil prices tumbled 4% on Monday after the U.S. and Iranpaused strikes over the weekend after two weeks of attacks, raising hopes of adiplomatic solution that would de-escalate the conflict and allow shipping toresume in the Strait of Hormuz.

Brent crude futures fell $3.96, or 4.1%, to $92.82 by0329 GMT after briefly slipping under the key support level of $90 earlier inthe session.

U.S. West Texas Intermediate crude was at $85.29 abarrel, down $4.02, or 4.5%.

Both contracts are trading at ⁠their lowest levels innearly a week after rising for the past three weeks.

Brent had reached $100 per barrel as the conflict, whichreduced oil shipments via the Strait of Hormuz, spilled over to the Red Sea,hindering exports from the world's top exporter, Saudi Arabia, via the Babel-Mandeb strait to Asia.

The U.S. ambassador to the United Nations, Mike Waltz,told "Fox News Sunday" and other U.S. media that President DonaldTrump had decided to pause U.S. attacks to allow more time for diplomacy.

"Oil prices fell sharply in early trading as theU.S. and Iran refrained from further military action, offering the firsttangible signs of a potential de-escalation in tensions," said INGanalysts in a client note.

"The price action in ⁠oil this morning clearlyreflects the market's desperation for positive news."

Despite the pause in attacks, fewer than 10 commodityvessels passed through the Strait of Hormuz daily during the weekend, shippingdata from Kpler showed.

"Any rebound in flows through the Strait of Hormuzis likely to prove slow and partial, as many shippers remain wary and will wantgreater confidence in their safety before ⁠they bring more empty ships into theStrait," MST Marquee analyst Saul Kavonic said.

In addition, ship traffic through the Bab el-Mandebstrait fell on Sunday after Yemeni Houthis attacked Saudi oil installationsalong the Red Sea coast, although a third Chinese supertanker exited via ⁠theBab el-Mandeb strait.

However, some analysts are still expecting markets to besupported if crude supplies stay affected by ongoing shipping risks in theMiddle East and the Russia-Ukraine war.

"As the Middle East conflict widened to the Red⁠Sea and Ukrainian drones struck Russian ships and refineries...Sustained(supply) disruption would likely keep oil prices elevated and continue to poseupside risks to global inflation," said UOB analysts in a note.

(REUTERS)

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