Oil prices fell sharply in early Asian trading on Monday after United States President Donald Trump said Washington would restart new negotiations with Iran to end the war in the Middle East and reopen the strategic Strait of Hormuz.
The development sent the international oil market lower as investors reacted to the prospect of a diplomatic solution to the conflict and the reopening of the major shipping route.
International benchmark Brent crude for September delivery dropped 4.69 per cent to $83.81 per barrel around 2250 GMT Sunday.
The US benchmark West Texas Intermediate fell 4.67 percent to $80.72 per barrel.
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Reports said the latest rise in oil prices followed Trump’s announcement on Sunday that fresh talks with Iran would start on Monday.
The President said he had delayed major military strikes against Iran to pursue a diplomatic solution to the conflict.
“And what we’re doing now is negotiating with them. “It’s starting tomorrow afternoon,” said Trump.
He did not say, however, where the talks would take place or who would take part.
The war, which began in late February after the United States and Israel attacked Iran, has made the global oil market very volatile.
The conflict has effectively closed the Strait of Hormuz, one of the world’s most important transit routes for the movement of crude oil and natural gas.
The waterway is crucial to the world’s energy supplies and any long disruption has raised fears of possible shortages and more expensive fuel globally.
Iran, meanwhile, said Sunday it was close to agreement with Oman on a new route through the Strait of Hormuz.
The announcement came hours after the United States called off major planned strikes against Iran as diplomatic efforts to resolve the conflict gained momentum.
Any reopening of the strategic waterway or the creation of an alternative route could ease pressure on global energy supplies and further influence oil prices in the coming days.
