Global oil prices fell sharply on Monday after US President Donald Trump announced that fresh negotiations with Iran would begin later in the day, raising hopes of easing tensions in the Middle East and reducing fears of supply disruptions.
Brent crude and West Texas Intermediate (WTI) both dropped by more than five per cent at one stage of trading as investors reacted to the prospect of renewed diplomacy between Washington and Tehran. The decline was also driven by an agreement among OPEC+ members to increase oil production from September.
Speaking aboard Air Force One on Sunday, Trump said the upcoming discussions would focus on the Strait of Hormuz, one of the world’s most critical energy shipping routes, as well as Iran’s nuclear programme. He described the planned negotiations as an opportunity to avoid a military escalation after previously threatening tougher action against Tehran.
Iran, meanwhile, confirmed it was close to reaching an agreement with Oman on a new shipping arrangement through the Strait of Hormuz. The waterway has remained a major flashpoint in recent months after Tehran insisted that vessels use routes close to its coastline, creating concerns over global energy supplies.
Market sentiment was further influenced by OPEC+, led by Saudi Arabia and Russia, after the group agreed to raise oil production by 188,000 barrels per day beginning in September. The expected increase in supply added downward pressure on crude prices, reinforcing expectations of a more balanced global oil market.
Currency markets also remained in focus after US and Japanese officials confirmed a rare joint intervention to strengthen the Japanese yen. Trump described the move as a gesture of cooperation between the two allies, while Japan’s Finance Minister, Satsuki Katayama, said authorities were prepared to intervene again if necessary to prevent excessive currency volatility.
Asian stock markets posted mixed performances despite the easing in oil prices. South Korea’s Kospi index retreated as heavyweight chipmakers SK hynix and Samsung lost ground after last week’s record rally. Markets in Tokyo, Shanghai, Sydney and Singapore also traded lower, while Hong Kong, Taipei, Manila, Wellington and Jakarta recorded modest gains.
On Wall Street, however, investor confidence remained strong after Amazon reported better-than-expected quarterly earnings, adding to optimism surrounding artificial intelligence investments following Microsoft’s strong financial results earlier in the week.
