Oil Prices Plunge on Easing Iran Supply Fears
Oil prices tumbled nearly 4% on Monday, reversing earlier gains, after US Vice President JD Vance announced progress in negotiations with Iran and confirmed that the Strait of Hormuz remained open for shipping. Brent crude settled at $77.46 a barrel, down $3.11 or 3.86%, as of 1757 GMT.
Early Spike on Trump Threat
In early trading, prices had surged to $82.30 a barrel following threats from US President Donald Trump to restart hostilities with Iran and Tehran's announcement that it had again closed the strategic Strait of Hormuz. The strait is a vital chokepoint for global oil shipments, and any disruption typically triggers sharp price increases.
US Authorizes Iranian Oil Sales
Adding to the supply-side relief, the US Treasury Department issued a general license on Monday authorizing the sale of crude oil and petrochemical and petroleum products of Iranian origin through August 21. This move effectively allowed Iranian oil to flow into global markets, further calming fears of a supply shortage. According to the Treasury Department, the license aims to facilitate the sale of Iranian-origin crude oil and petroleum products, including petrochemicals, until the specified date.
The combination of diplomatic progress and the US authorization helped reverse the earlier spike, as traders reassessed the risk of a prolonged disruption in the region. Analysts noted that the market remains sensitive to geopolitical developments but that the immediate threat of a supply crisis has diminished.
