Crude prices fell sharply on Monday as the United States and Iran suspended mutual air strikes in the Persian Gulf, easing fears of a prolonged energy supply disruption. Brent crude dropped nearly 6 percent to around $91 per barrel, while West Texas Intermediate fell a similar margin to the mid-$80s, after the US halted nearly two weeks of daily strikes against Iran following an Omani delegation's visit to Tehran to discuss reopening the Strait of Hormuz.
The sell-off marks a dramatic reversal from last week, when Brent briefly topped $102 a barrel, its highest since May. Markets are now pricing in hopes for renewed diplomacy and a restoration of Middle Eastern energy flows, with both sides refraining from military action for a second consecutive day.
US gasoline averaged $4.11 per gallon on Monday, while traders see a 36 percent chance the Federal Reserve will raise interest rates at its next meeting.