Oil prices slide as Trump delays Iran strike to pursue nuclear deal
Oil prices dropped by more than $4 a barrel on Monday (August 3, 2026) after U.S. President Donald Trump chose to hold off on a fresh military strike against Iran, instead seeking a quick agreement to curb Tehran's nuclear programme and reopen the Strait of Hormuz.
Brent crude futures fell $4.08, or 4.64%, to $83.85 per barrel, while U.S. West Texas Intermediate crude settled at $80.66 a barrel, down $4.01, or 4.74%. The decline follows a period of sharp volatility in the global energy market.
Both benchmarks had surged more than 20% last month after fighting resumed between the U.S. and Iran, and attacks on several tankers near Oman raised security fears, prompting shippers to avoid entering the Gulf to load crude. In a sign of possible de-escalation, Mr. Trump said late Saturday (August 1, 2026) on his Truth Social platform that Iran and other West Asian countries had asked for time to finalise a deal that would lead to the “Immediate, Complete and Total” reopening of the vital waterway and “an end to Iran’s nuclear threat”.
Market analysts, however, remained cautious about whether the truce would hold. “The bigger focus is whether this week turns into a rinse and repeat of last week — with hopes of a deal collapsing as Iran digs in its heels and continues to leverage its control over the Strait, potentially through an attack on a U.S. base or a tanker transiting the waterway,” said Tony Sycamore, an analyst at IG Market.
Shipping data released on Monday showed two tankers loaded with Saudi oil had crossed the Bab el-Mandeb Strait out of the Red Sea over the weekend, while traffic in the Strait of Hormuz slowed following reports of vessel attacks. The United Kingdom Maritime Trade Operations (UKMTO) has reported three more tanker attacks since Saturday, indicating that the security situation remains fragile.
In a separate development, OPEC+ approved an oil production quota increase of approximately 188,000 barrels per day from September, according to the producer group. This move completes the unwinding of a layer of voluntary output cuts. However, due to export disruptions from the Gulf, as well as from Russia and Kazakhstan caused by the Iran and Ukraine conflicts, successive monthly OPEC+ hikes implemented over most of this year have remained largely on paper and have had little measurable impact on global supply.
The Strait of Hormuz is a strategically critical chokepoint, through which roughly 20% of global oil consumption passes. Its closure or disruption has historically led to significant price spikes. The current de-escalation, if sustained, could help stabilise markets and ease concerns about energy security. But with continued tanker attacks and diplomatic uncertainty, traders remain wary of a renewed flare-up in tensions.
