Oil prices slid nearly 5% on Monday, marking their sharpest single-day drop in more than six months. The decline followed comments from U.S. President Donald Trump suggesting that Iran was “seriously talking” with Washington, signalling a possible de-escalation with the OPEC member.
Brent crude futures fell $3.38, or 4.9%, to $65.94 a barrel by 05:28 GMT. U.S. West Texas Intermediate crude dropped $3.33, or 5.1%, to $61.88 per barrel.
Both benchmarks retreated from multi-month highs as fears of a potential military strike on Iran eased after Trump’s remarks over the weekend.
The sell-off was compounded by broader weakness across commodity markets, led by sharp declines in gold and silver. Analysts partly attributed the move to renewed strength in the U.S. dollar, which tends to pressure dollar-denominated commodities.
Trump had previously warned of intervention if Iran failed to agree to a nuclear deal or continued suppressing protests. Those persistent threats helped support oil prices through January, according to Priyanka Sachdeva, an analyst at Phillip Nova.
Sachdeva added that the latest pullback was reinforced by the stronger dollar, which makes oil more expensive for non-U.S. buyers and further weighs on demand.
Over the weekend, Trump told reporters that Iran was “seriously talking,” shortly after Iran’s senior security official Ali Larijani said preparations for negotiations were underway.
Trump’s comments, along with reports that Iran’s Revolutionary Guard naval forces were not planning live-fire drills in the Strait of Hormuz, pointed to a reduction in geopolitical tensions, according to IG market analyst Tony Sycamore.
Sycamore said oil markets interpreted the developments as a step back from confrontation, easing the geopolitical risk premium built into prices during last week’s rally and triggering profit-taking.
Meanwhile, OPEC+ agreed at a meeting on Sunday to keep oil production unchanged for March. The group had already paused planned output increases from January through March 2026, citing seasonally weaker demand.
Capital Economics said geopolitical risks were masking a fundamentally bearish oil market. The consultancy added that last year’s brief conflict between Israel and Iran, combined with ample global supply, is likely to continue weighing on Brent crude prices into the end of 2026.
