Oil extended its losses following a temporary pause in hostilities between the United States and Iran, fueling hopes for a de-escalation of the conflict in the Middle East and easing concerns over energy supplies.
September Brent crude fell 3.71% to $85.08 a barrel, while West Texas Intermediate (WTI) dropped around 3%, slipping to $80.11.
Although Tehran denied reports of a ten-day ceasefire with Washington, the suspension of military operations helped boost market sentiment. Supporting this scenario were also rumors that depleted U.S. ammunition stockpiles had prompted the Trump administration to postpone a possible strike against Iran, a premise later downplayed by the president himself.
According to Commonwealth Bank of Australia, the drop in crude reflects a scaling back of fears over an immediate escalation, though risks remain high. In particular, renewed tensions in the Strait of Hormuz could reignite the conflict and put fresh pressure on the energy market.
Goldman Sachs also maintains a cautious stance: Brent could fall toward $80 a barrel by the end of the year if the Strait of Hormuz becomes fully operational again, but ongoing tensions in the Red Sea and the threat of attacks on Saudi oil infrastructure continue to pose potential upside risks for prices.