Oil drops over 5% as Middle East tensions ebb on diplomatic efforts
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- WTI crude for September delivery fell nearly 6% to $79.66 per barrel, and Brent crude for October delivery dropped 5.16% to $83.39 a barrel as traders unwound geopolitical risk premiums built up on strike fears.
- Trump posted early Sunday on Truth Social that Iran and other Middle Eastern countries had asked him to hold off any attack because 'the perimeters of a deal has been agreed to,' according to his post.
- Trump's proposed deal would include the 'Immediate, Complete, and Total OPENING OF THE HORMUZ STRAIT, and an end to Iran's nuclear threat,' per his Truth Social message.
- Trump had been weighing another round of strikes amid fading diplomatic prospects in a conflict that began on Feb. 28.
- Iran's acting defense minister Seyyed Majid Ibn Al-Reza responded cautiously, calling Trump's statements 'psychological and cognitive warfare' but adding that Tehran 'consider[s] every threat to be real.'
- Fars International, an IRGC-affiliated news agency, dismissed Trump's demands as a 'wish list' in a Telegram post on Sunday.
Why it matters: Both WTI and Brent shed roughly $4–5 per barrel in a single Asian session, showing how quickly traders unwind strike-risk premiums once a leader signals de-escalation. The 5%+ drop signals investors took at least the possibility of a Hormuz Strait deal seriously enough to cut supply-fear pricing, even as Iran's IRGC-linked Fars dismissed the proposal as a 'wish list.'
