Oil Falls Over 5% as Trump Halts Iran Strikes for Hormuz Talks

Oil prices tumbled more than 5 percent on Monday after President Trump announced he had called off planned strikes on Iran in favor of negotiations aimed at reopening the Strait of Hormuz and addressing Tehran's nuclear program. Brent crude fell to $83.50 a barrel while West Texas Intermediate dropped below $80. European stock indexes climbed in early trading as energy costs eased and hopes grew for reduced geopolitical risk.

Trump posted on his Truth Social platform late Saturday that Iran and other Middle Eastern nations had requested time to finalize an agreement. The deal would require the immediate and complete reopening of the strait along with an end to Iran's nuclear threat. He followed up Sunday by saying talks with Tehran would begin Monday. Markets responded quickly with Brent crude shedding more than $4 a barrel at one point and U.S. futures falling over $5.

The drop comes after oil benchmarks surged more than 20 percent in July amid renewed U.S.-Iran fighting and attacks on tankers in the strait. Those disruptions had revived old fears about supply lines through one of the world's critical shipping routes. Analysts noted the price relief could ease pressure on inflation and help keep bond yields from climbing further.

European shares opened higher with the Stoxx 600 index gaining 0.4 percent. Energy stocks fell while travel and leisure shares rose more than 2 percent. In premarket trading U.S. futures also pointed upward with the Dow Jones futures up more than 1 percent and the S&P 500 futures gaining around 0.6 percent. The moves reflect investor relief that another round of direct conflict had been avoided at least for now.

Iran's response remained guarded. State media described Trump's statements as psychological warfare yet signaled that every threat would be taken seriously. One outlet tied to the Revolutionary Guard called the demands a wish list. Such language fits a pattern where Tehran has long used negotiations to buy time while advancing its regional goals.

Trump's decision stands out against years of pressure from foreign policy circles that favor sustained military involvement in the Middle East. Those voices often downplay the costs to American drivers and manufacturers when energy prices spike. Lower oil prices now offer a direct benefit to households facing higher costs at the pump and in everyday goods. The shift also undercuts arguments that endless confrontation serves U.S. interests.

Market watchers pointed out that any lasting deal would need to address Iran's leverage over the strait without repeating past agreements that failed to curb nuclear ambitions. Previous rounds of diplomacy produced temporary lulls followed by renewed tensions and higher prices. Investors appear willing to price in short-term gains while remaining cautious about longer-term stability.

The week's economic calendar includes manufacturing data and Friday's jobs report which could shape views on whether the economy can sustain momentum. Corporate earnings from several major firms will also test whether strong results can continue amid shifting energy costs. For now the immediate market reaction favors the pause in hostilities and the prospect of lower fuel expenses.