Crude oil tumbled sharply on Monday after Washington and Tehran both stepped back from two weeks of direct strikes on each other. Brent crude dropped as much as seven percent below ninety dollars a barrel before clawing back roughly half of that loss by midday.
The pullback triggered a broader relief rally across stocks, bonds, and gold, while the dollar weakened against most major currencies.
Even after Monday’s drop, the benchmark remains far above where it started the year, still up more than fifty percent in 2026 after months of Middle East supply disruptions.
The pause reportedly began late Friday when the US suspended a thirteen night airstrike campaign against Iran to give diplomacy a window and let military stockpiles recover. A senior Iranian official said Tehran would hold its own retaliatory strikes as long as the American pause continues, describing it as an informal attack for attack arrangement.
Traders had spent weeks pricing in the risk of a full blockade at the Strait of Hormuz, and that fear is now unwinding fast. Progress toward a durable resolution over the strait, combined with a reported build in US crude inventories, undercut the war risk premium that had briefly pushed prices toward ninety three dollars a barrel.
Easing US sanctions on Iran are also expected to bring more barrels back onto the market in coming months, with most shut in production forecast to return to pre conflict levels by year end. Wall Street welcomed the move, with the S&P 500, Dow, and Nasdaq all advancing on the day.
Analysts are cautious about how long the calm will last given how many times this conflict has swung between escalation and ceasefire already. Markets are expected to stay highly reactive to any fresh headlines out of the region this week.
