Oil gets cheaper after Trump cancels massive strike on Iran

World oil prices fell sharply after U.S. President Donald Trump abandoned a planned large-scale strike on Iran and announced new negotiations with Tehran.

October Brent crude futures lost up to 7.3% during trading. U.S. West Texas Intermediate fell below $80 per barrel, Bloomberg reports.

According to Barron's, on Sunday evening Brent was trading around $82.40 per barrel, and WTI at $79.29. At the same time, quotes remained volatile: in another market snapshot, both benchmarks were down about 5%, with prices at $83.87 and $80.79 respectively.

Trump said he canceled the prepared attack after appeals from U.S. allies in the Middle East, including Saudi Arabia. The U.S. President agreed to call off the strike on condition of a swift agreement that would ensure the resumption of shipping through the Strait of Hormuz.

The market perceived Washington's decision as a signal of a possible de-escalation and easing of risks to oil supply from the Persian Gulf. Due to hostilities, some tankers were unable to freely leave the region, which had previously supported high energy prices.

The current drop partially erased the gains from July. In the previous month, Brent futures rose almost by a quarter—the biggest monthly jump since March. Even after the latest slump, U.S. oil remains about 20% more expensive than before the start of the current conflict with Iran.

Further price dynamics will depend on whether U.S.-Iran negotiations begin and whether the sides can agree on safe passage of vessels through the Strait of Hormuz. Trump himself did not name the meeting place, the participants or the timeframe within which the deal must be reached.

Based on materials from: Bloomberg, Barron's, Associated Press