Global oil prices fell nearly 7 percent on Monday, dragging Brent crude down to $90 per barrel, as a second straight day without fresh fighting between the United States and Iran raised expectations that diplomatic efforts could prevent a broader Middle East conflict and ease fears of prolonged supply disruptions.
As of 1:30 p.m. WAT, Brent crude traded at $90.44 per barrel, down 6.55 percent, while West Texas Intermediate (WTI) fell 5.84 percent to $84.09 per barrel, reversing part of last week's rally that briefly pushed Brent above the $100 mark.
The latest decline reflects growing optimism that diplomatic efforts could prevent a wider regional conflict, reducing the risk premium that had built into crude prices following attacks on commercial shipping in the Middle East.
The turnaround comes after U.S. President Donald Trump suspended further military strikes on Iran, ending nearly two weeks of consecutive bombardments. Reports indicate the decision was aimed at creating space for diplomacy after the conflict intensified across the Gulf and the Red Sea.
Market sentiment also improved on expectations that negotiations could eventually resume, although Iranian officials insisted conditions for direct talks remain absent, accusing Washington of undermining diplomacy through military action.
Despite the sharp fall in crude prices, energy markets remain cautious as major shipping routes continue to face operational risks.
Traffic through the Strait of Hormuz remains well below normal levels, while vessel movements through the Bab el-Mandeb Strait have also slowed considerably following repeated Houthi threats against Saudi oil shipments.
According to shipping intelligence data, only 11 vessels transited the Bab el-Mandeb waterway on Sunday, representing one of the lowest traffic levels recorded in months. Of those, seven were oil tankers, highlighting the continued reluctance of shipping companies to use the strategic corridor despite the temporary military pause.
Several ship operators have reportedly diverted vessels toward the Suez Canal or delayed planned transits through the Red Sea after Houthi attacks targeted Saudi-linked tankers last week.
Shipping data also showed that two very large crude carriers were heading to Saudi Arabia's Yanbu export terminal to load crude, while outbound tankers carrying Saudi, UAE and Russian crude continued journeys toward Asian markets, including China and Pakistan.
Industry intelligence further indicated that some tankers have begun operating with their Automatic Identification System (AIS) signals switched off while loading at Yanbu, reflecting heightened security concerns as operators attempt to avoid becoming potential targets.
Although crude prices weakened significantly, analysts caution that the market remains vulnerable to renewed volatility because the underlying security risks affecting global oil logistics have not disappeared.
The decline was also supported by expectations that OPEC+ could consider increasing production quotas during its next meeting if market conditions permit, potentially adding more barrels to global supply and easing concerns over shortages.
Even so, traders continue to monitor developments across both the Strait of Hormuz and the Bab el-Mandeb Strait, where any renewed disruption could quickly reverse Monday's losses.
Last week, Brent crude climbed above $100 per barrel for the first time in nearly two months after attacks on Saudi-linked tankers and threats against regional shipping routes triggered fears of prolonged supply disruptions.
While the latest diplomatic pause has reduced immediate concerns, market participants say global oil prices will remain highly sensitive to developments in the Middle East until shipping flows through the region return to normal levels.