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Brent crude drops after US and Iran pause strikes, but supply stress persists
Brent fell to $85.50 after the weekend pullback, while shipping through the Strait of Hormuz fell to fewer than ten vessels daily versus a pre-conflict average above 100, signaling disruption is not easing.
Brent crude gapped sharply lower to $85.50, dropping from Friday’s $98.69 close after the United States and Iran refrained from launching fresh attacks over the weekend, according to Action Forex. The absence of further escalation led traders to unwind some of the geopolitical risk premium that had pushed prices above $100 last week.
Action Forex said the move looks driven more by sentiment than by improving physical fundamentals. US airstrikes stopped on Friday and Saturday, and Sunday marked the second consecutive day without military action, after President Donald Trump paused further strikes to allow more time for diplomacy, according to US Ambassador to the United Nations Mike Waltz.
The article cautioned that physical supply conditions have not normalized. It cited shipping data from Kpler showing fewer than ten commodity vessels transited the Strait of Hormuz daily over the weekend compared with a pre-conflict average of more than 100 crossings a day, while another key chokepoint, the Bab el-Mandeb, showed deterioration, suggesting disruption is spreading beyond maritime transport.
With neither Washington nor Tehran announcing a ceasefire or a binding de-escalation commitment, Action Forex said the price selloff carries risk of a bull trap, since financial markets can remove risk premium quickly but restoring confidence in global shipping networks typically takes longer. It added that the outlook depends on whether vessel traffic through Hormuz begins to recover.
Latest closeWTI crude $90.47 ▼1.9%|Brent $98.38 ▼2.3%