Oil prices fell sharply on Monday and extended losses into Tuesday after the United States and Iran paused an exchange of strikes that had lasted thirteen consecutive nights and threatened to disrupt energy flows through the Strait of Hormuz.
International benchmark Brent crude fell 8.7% on Monday to close at $88.36 a barrel; U.S. West Texas Intermediate dropped 7.5% to $82.61. By Tuesday morning Brent had fallen a further 1% to around $87.24, with WTI at $81.60—a reversal from the prior week when Brent had reached $102.
President Donald Trump told reporters aboard Air Force One on Monday that the United States was having "good talks" with Iran and that there was "a chance of a resolution," while maintaining that strikes would resume if negotiations failed.
Iran's government issued similarly conditional statements. U.S. Ambassador to the United Nations Mike Waltz confirmed that talks were "ongoing" but flagged "internal fighting" on the Iranian side, moderating optimism about a swift resolution.
The scale of the disruption to energy supply chains is stark.
Barclays analysts reported that in the week ending July 24, crude oil and refined product net exports through the Strait of Hormuz averaged 2.9 million barrels per day—compared with 5.9 million barrels per day the prior week.
The strait normally carries roughly 20% of the world's seaborne oil, and the conflict had also expanded to the Red Sea, compounding insurance and routing costs for tanker operators.
The Commonwealth Bank of Australia noted that the decline in prices reflects easing concern about immediate escalation, but cautioned that risks to global energy supply remain elevated.
A resumption of hostilities or a failure in the current diplomatic outreach would rapidly reverse the price declines.
Reports indicate that a shortage of U.S. precision munitions was also a contributing factor in the decision to pause—a detail that carries implications for the credibility of a sustained military campaign should talks break down.
For boards with material exposure to energy costs, logistics, and maritime supply chains, the conflict pause reduces short-term price pressure but does not resolve the underlying geopolitical risk.
Brent at $87–88 remains elevated relative to the start of 2026, and the gap between 2.9 million and 5.9 million barrels per day of Hormuz throughput illustrates how much production and shipping capacity remains constrained.
Scenario planning for a conflict resumption should remain on board agendas.
Source: CNBC
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