Crude oil prices cooled sharply on Monday after US President Donald Trump reported “good and productive” talks with Iran, temporarily easing fears of a military escalation in the Middle East. Brent crude fell over 11% during early trading, though it later recovered slightly, ending the day around 7.73% lower.
Trump, in a post on Truth Social, said that the US and Iran had engaged in detailed discussions aimed at a “complete and total resolution” of hostilities in the region. He also announced a five-day postponement of planned strikes on Iranian power plants and energy infrastructure, contingent on continued productive talks.
Oil markets had initially reacted to heightened tensions, with Brent for May delivery rising 1% to $113.32 per barrel and West Texas Intermediate (WTI) gaining about 2.8% to $101.01 per barrel, as investors assessed the risk of conflict-driven supply disruptions. The sharp decline after Trump’s announcement reflected relief over the temporary pause in military action.
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The energy sector’s volatility reverberated across global markets. India’s GIFT Nifty surged more than 4% in early trading, closing 3.67% higher at 23,327, while US futures recovered with S&P 500 futures up 2.16% at $6,700.75 and Nasdaq 100 futures gaining 1.96% at $24,573, signaling investor optimism following the de-escalation.
Meanwhile, Goldman Sachs raised its 2026 oil price forecasts, citing prolonged disruption of flows through the Strait of Hormuz as the largest-ever supply shock to global crude markets. Brent is now expected to average $85 per barrel, up from $77, while WTI is forecast at $79 per barrel, up from $72. Analysts assumed flows through the strait could remain at only 5% of normal for six weeks before a gradual recovery over the following month.
The energy market turmoil underscores the broader economic impact of the US-Israel-Iran conflict, now entering its fourth week. With the Strait of Hormuz serving as a critical chokepoint for global oil exports, markets are closely monitoring diplomatic developments to gauge potential supply disruptions.
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