Oil price dives as US and Iran pause attacks

Oil price dives as US and Iran pause attacks The price of oil fell more than 9% on Monday after hopes grew that a pause in hostilities between the United States and Iran could help move the conflict toward a resolution. Brent crude, the global benchmark for oil, dropped below $88 a barrel, a sharp reversal from the previous week when it had risen above $100. The decline followed remarks by the US ambassador to the United Nations, who said attacks on Iran had been halted for a second straight night in order to give "talks immoderate space" a chance to progress. An Iranian service spokesperson said on Sunday that Tehran had stopped "retaliatory" attacks in the region in response. The outbreak of the Iran‑US clash had earlier driven oil prices higher as the fighting led to an effective shutdown of the Strait of Hormuz, a vital shipping lane that normally carries about 20% of the world’s oil and liquefied natural gas (LNG). When Iran and the United States signed a memorandum of understanding in June to cease military operations and reopen the strait, oil prices slipped back to pre‑war levels of roughly $70 a barrel. However, the breakdown of the ceasefire earlier this month revived concerns about global energy supplies and pushed prices upward again. Last week Brent crude hit $100 a barrel for the first time since May, after Houthi militias in Yemen attacked oil tankers in the Red Sea, threatening a key export route that Saudi Arabia uses to bypass the Strait of Hormuz. Susannah Streeter, chief concern strategist at Wealth Club, said markets were staying "cautious fixed the twists and turns during this conflict". Despite the sharp drop in crude, "there is inactive important uncertainty baked into these prices and a reticence astir whether negotiations volition pb to a lasting breakthrough," she added. The ongoing tension between the United States and Iran—and its effect on oil—has raised the cost of fuels such as petrol and diesel in many countries. That often creates knock‑on effects for other goods, including food, as businesses pass on higher expenses to consumers, which can push up inflation.