Oil plunges 5% after Trump calls off Iran strike

Oil prices plunged by nearly five percent on Monday after US President Donald Trump postponed a new strike on Iran, in an effort to reach a swift agreement with Tehran that could increase oil supplies from the Gulf.

As of 14:39 GMT, Brent crude futures fell $4.41, or five percent, to $83.52 a barrel. US West Texas Intermediate dropped $5.18, or 6.1 percent, to $79.49 a barrel.

Brent is on track for its lowest closing level since July 13.

Iran said on Monday that "there are no ongoing talks with the United States or plans for meetings," contradicting Trump’s statements, in which he justified canceling the strikes by referring to talks he said "will take place," repeating a pattern he has used before.

Over the past two days, Trump has repeated a pattern seen over the past five months: announcing plans for "large-scale strikes" on Iran, only to call them off at the last moment.

Speaking aboard Air Force One on Sunday, Trump said: "Would I prefer to make a deal? I’m not looking to kill people."

He added, "What we’re doing now is talking to them, in the form of negotiations... which will start tomorrow afternoon," without specifying the location or participants.

Iranian Foreign Ministry spokesperson Ismail Baghaei denied Trump’s statements, saying there are no negotiations with the United States and no meetings scheduled. He added that Iran has no plans to host foreign delegations or send negotiators abroad in the coming days.

Trump again on Monday called on US oil companies to lower gasoline prices for American consumers, and criticized Chevron CEO Mike Wirth for not appreciating his administration’s efforts to support the oil sector.

Ship tracking data on Monday showed that six large Saudi-flagged tankers changed course in the Gulf of Aden in recent days and are heading to South Africa, after Yemen’s Iran-aligned Houthi movement threatened to target Saudi vessels.

Shipping data also revealed that two tankers carrying Saudi oil transited the Bab al-Mandab Strait from the Red Sea over the weekend, while traffic through the Strait of Hormuz slowed following reports of attacks on vessels.

The OPEC+ alliance agreed on Sunday to raise oil production quotas by about 188,000 barrels per day starting in September.

However, disruptions to exports from the Gulf, Russia, and Kazakhstan due to the wars in Iran and Ukraine mean that the consecutive monthly increases in OPEC+ output for most of this year have not resulted in additional oil supplies to the market.