Oil falls sharply as Trump cancels Iran strikes, but Tehran denies talks

Global oil prices fell sharply after US President Donald Trump said he had cancelled planned attacks on Iran and claimed talks were under way, raising hopes that tensions in the Middle East could ease and the Strait of Hormuz may reopen more fully.

However, Iran denied that negotiations with the United States were taking place or scheduled, leaving markets to balance optimism over a possible diplomatic opening against continuing uncertainty over the five-month conflict.

West Texas Intermediate crude for September delivery fell US$4.33, or 5.11%, to close at US$80.34 per barrel on Monday, while Brent crude for October delivery dropped US$4.16, or 4.73%, to US$83.77 per barrel, according to Thansettakij.

The decline came after Trump said he had decided to cancel what he described as “massive attacks” on Iran after requests from Iran and several Middle Eastern countries for Washington to delay military action. Thansettakij reported that the move followed claims that an agreement in principle had been reached, including the full and immediate reopening of the Strait of Hormuz and an end to Iran’s nuclear threat.

Reuters, however, reported a more uncertain picture. Trump told reporters at the White House that talks with Iran were “going on right now” and called the moment a “last chance” for Tehran to sign what he described as a good document to end the war.

Iranian Foreign Ministry spokesman Esmail Baghaei rejected that account, saying no negotiations with the United States were taking place and no meetings had been scheduled. He said Iran had no plans to host foreign delegations or send negotiators abroad in the coming days, adding that the only discussions under way were with Oman over management of the Strait of Hormuz.

The contradictory statements cast doubt over whether a diplomatic breakthrough is near. Reuters said the developments fit a pattern in which Trump has repeatedly announced or threatened major strikes, only to later step back while citing diplomatic contacts.

The Strait of Hormuz remains central to the dispute. Before the conflict, the waterway handled around one-fifth of global oil and liquefied natural gas flows. Washington argues that Iran must open the route, while Tehran insists it retains authority over shipping traffic.

Trump later wrote on Truth Social that the US Navy had full control over the strait, describing it as the “United States Wall of Steel” and saying nothing would pass to Iran unless Washington allowed it, or unless there was a deal or “total surrender”.

Oil markets responded positively to the prospect of reduced tensions. Reuters reported that Brent crude fell about 7% to around US$83.77 per barrel, while major US stock indexes gained and the Dow Jones Industrial Average closed at a record high.

Additional pressure on oil prices came from the OPEC+ decision on Sunday to raise production by 188,000 barrels per day in September. The group had also agreed to add the same amount of production in August, July and June, increasing expectations of more supply entering the market.

Trump also used his latest Truth Social posts to call on Chevron and other oil companies to lower fuel prices for Americans, saying Chevron had benefited after the US government helped the company return to Venezuela.

The market now faces two competing forces. On one side, any credible move towards reopening Hormuz and reducing US-Iran military action could push oil lower by easing supply fears. On the other, Iran’s denial of talks and the unresolved dispute over control of the strait suggest that price volatility is likely to continue.

For energy-importing economies in Asia, the direction of oil prices will remain closely tied to whether Washington and Tehran move towards an actual agreement — or whether the latest pause proves only another temporary lull in the Gulf crisis.

Sources: Thansettakij, Reuters