Oil Prices Plunge 5% as Trump Opens Iran Talks, Halts Attack

Oil prices tumbled nearly 5% on Monday after President Donald Trump announced new negotiations with Iran would begin imminently, reversing his threat of a large-scale military strike. The announcement, made Sunday, signaled a dramatic shift from days of heightened tension that had pushed global energy markets to the brink.

Brent crude, the international benchmark, was trading around $83.81 a barrel for September delivery on Sunday evening, down 4.69%, according to market data. The drop followed Trump's statement that talks would cover the Strait of Hormuz – a critical artery for global oil shipments – and ultimately the denuclearization of Iran. The move eased fears of a renewed conflict that could disrupt supplies from the region.

Diplomatic Turn After Threat of Attack

Trump had been reportedly considering strikes against Iranian energy infrastructure, with US embassies across the region put on alert. However, in a sudden about-face, the president told reporters aboard Air Force One on Sunday that the "perimeters" of a deal were in place. "Now what we're doing is we're talking to them in the form of a negotiation. It begins tomorrow afternoon," he said, without disclosing the venue or participants.

The president claimed he had been asked by Iran, as well as US partners Saudi Arabia, the United Arab Emirates, and Qatar, to hold off on an attack he said would have been "the biggest attack since World War II." Iranian media disputed the assertion that Tehran had requested a halt to strikes.

Strait of Hormuz at the Center

The strategic waterway has become the main sticking point in the five-month-old conflict. Iran closed the strait after the war began on February 28, when the US and Israel launched surprise strikes, and has since insisted on controlling passage and charging tolls – a demand Washington rejects. A previous ceasefire that included reopening the strait collapsed, and Iran has tightened its grip on the shipping lane.

On Sunday, Iranian Foreign Ministry spokesman Esmaeil Baqaei said Tehran was close to a deal with Oman, which lies across the strait, on a new route through the waterway. "We are now going to reach an understanding on a route acceptable to both sides – neither the northern route nor the southern route – but one that respects the sovereign rights of both sides and safeguards our national interests and security," he told state television. The remarks came as a tanker reported an explosion near the strait on Sunday, underscoring the continued volatility.

Reviving the Memorandum of Understanding

Iranian lawmaker Hassan Ghashghavi, spokesman for the parliament's national security commission, said mediators were trying to revive a US-Iran memorandum of understanding agreed in June. That document was never intended as a final peace deal but as a stepping stone toward comprehensive negotiations, and it included provisions on Hormuz. "They know that the main issue and, in fact, the key to the matter right now is the issue of the Strait of Hormuz, so yes, there is an exchange of views," Ghashghavi said.

In a post on X, Iranian President Masoud Pezeshkian wrote: "We must strive to compel the enemy to remain committed to what it has signed."

Background and Path Forward

The war began with US and Israeli strikes over Iran's nuclear program, which Western nations suspect is aimed at producing a bomb. Tehran insists the program is entirely civilian. Trump said at the conflict's outset that action was necessary to address that threat. Now, talks are slated to restart, focusing first on the Strait of Hormuz before moving to broader nuclear issues.

Analysts caution that previous negotiations have failed to produce lasting results, and the underlying disputes remain unresolved. Iran's insistence on controlling the strait and charging tolls is a major obstacle, as is the distrust built up over months of fighting. The coming days will reveal whether this new round of diplomacy can succeed where earlier talks fell short, and whether oil markets can sustain their relief rally.