Oil prices retreated across global markets as the threat of direct military conflict between the United States and Iran decreased. West Texas Intermediate futures for September delivery dropped 4.5% to $80.89 per barrel, while Brent crude for October delivery fell 4.4% to $84.10 per barrel.
President Donald Trump announced he canceled a planned military strike against Iran. He stated the decision followed requests from Iranian officials and other regional leaders who indicated that the outlines of a deal were in place to prevent further escalation.
According to the administration, the potential agreement includes a commitment to keep the Strait of Hormuz open for international transit. It also addresses concerns regarding Iran's nuclear program. Markets reacted quickly to the reduction in geopolitical risk, which had previously driven oil prices higher during the recent period of tension.
Despite the announcement, officials in Tehran remain cautious. While the defense ministry acknowledged the situation, state-affiliated media sources described the diplomatic outreach as a part of a wider tactical campaign. Traders will monitor further developments in the region as these diplomatic discussions continue.