Global oil markets have responded to renewed hopes of a diplomatic breakthrough between the United States and Iran after President Donald Trump announced plans for fresh negotiations instead of immediate military action.
Oil prices dropped during Asian trading on Monday after Trump said talks would begin, with West Texas Intermediate crude falling by 4.7% to $80.72 per barrel.
The negotiations are expected to focus on the future of the Strait of Hormuz, one of the world’s most important energy shipping routes, as well as Iran’s nuclear programme.
Trump said he decided to delay potential strikes against Iran after concluding that there was an opportunity to reach a deal. He claimed the proposed military action would have been one of the largest attacks since World War II.
The Strait of Hormuz has become a major point of disagreement in the conflict, with Iran seeking greater control over shipping routes while the United States opposes restrictions on international maritime movement.
Iran has indicated that it is close to reaching an understanding with Oman over a possible alternative route through the strait, although officials stressed that this would not necessarily mean the waterway has fully reopened.
The conflict between Washington and Tehran began on 28 February after the United States and Israel launched strikes against Iran, with tensions continuing despite periods of diplomatic engagement.
Iran has maintained that its nuclear programme is for peaceful purposes, while Western governments have raised concerns about its potential military use.
Analysts are closely monitoring the talks, as any agreement could ease pressure on global energy markets, while continued tensions around the Strait of Hormuz could threaten fuel supplies and keep oil prices volatile.