Oil price dives as US and Iran pause attacks

BBC - World Oil price dives as US and Iran pause attacks https://www.bbc.co.uk/news/articles/clyj834jn5lo?at_medium=RSS&at_campaign=rss 2026-07-27T10:50:23.388Z The price of oil sank more than 9% on Monday on hopes that a pause in attacks between US and Iran could help lead to a resolution to the conflict.

Iran's foreign ministry spokesperson Esmail Baghaei on Monday said Iran "currently have no negotiations with the United States," reiterating that official ongoing talks are solely with Oman regarding the future of the Strait of Hormuz.

What we know

The fall came after the US ambassador to the UN said attacks on Iran had been halted for a second night in a row to give "talks some space". An Iranian army spokesperson said on Sunday that Tehran had halted "retaliatory" attacks in the region in response.

Meanwhile, the Ukrainian military reportedly struck an Iranian commercial vessel in the Caspian Sea, killing one sailor and injuring another. Iran's Baghaei said on Monday that the situation in the Strait of Hormuz has "not changed and it is still closed." Oman, which sits on the opposite side of the strait to Iran, has emerged as a key player in negotiations.

Baghaei described talks on Friday and Saturday as "useful discussions." Oman has also said talks have been constructive, but analysts warn that normalization of traffic is unlikely in the short-term.

The details

The outbreak of the Iran war triggered a sharp rise in oil prices as the conflict led to the effective closure of the Strait of Hormuz, a key shipping route which usually carries about 20% of the world's oil and liquefied natural gas (LNG). When Iran and the US signed a memorandum of understanding in June to halt military operations and reopen the strait, the price of oil fell back to pre-war levels of around $70 a barrel. Last week it hit $100 a barrel for the first time since May, with added concerns coming after Houthi militia in Yemen attacked oil tankers in the Red Sea, threatening a key export route that Saudi Arabia had used to bypass the Strait of Hormuz. Oil prices plunged by more than 7% early on Monday as futures markets pointed to strong performance on Wall Street.

Reactions

Susannah Streeter, chief investment strategist at Wealth Club, said markets were remaining "cautious given the twists and turns during this conflict". "The main market risk remains the energy and shipping front," Deutsche Bank analysts wrote in a Monday note. "Traffic through Hormuz remains severely disrupted, while the conflict has broadened into the Red Sea." "This raises the prospect of simultaneous disruption to both Gulf and Red Sea export routes.

What to watch

When direct talks are possible, negotiators will have to agree on controversial topics, such as the future of Iran's nuclear program, sanctions relief and Tehran's support for its proxy groups in the Middle East. From an economic perspective, the most important negotiating point will be guarantees of maritime security and the return and normalization of toll-free, two-way traffic flows through the strategically vital Strait of Hormuz.