US-Iran de-escalation eases oil prices

Oil prices fell sharply on Sunday and Monday after the United States and Iran refrained from launching military strikes in the Persian Gulf for a second straight day, easing fears of an all-out war that could disrupt oil supplies through the Strait of Hormuz. Brent Crude dropped 4.9% to $92.02 per barrel, while West Texas Intermediate fell 5.6% to $84.34. Prices had surged earlier in July to a two-month high of $102 per barrel due to increased fighting in the Middle East and concerns over shipping safety. The conflict, which began with US and Israeli attacks on Iran in late February, has largely halted tanker traffic through the Strait of Hormuz, through which a fifth of the world's oil passes. Last week, attacks also hit Saudi oil tankers using the Red Sea. The elevated oil prices have pushed US gasoline prices to $4.11 per gallon, up from $3.15 a year ago, and have contributed to inflation pressures, leading traders to price in a 36% chance of a United States — Federal Reserve interest rate hike. Higher rates could slow the economy and chill housing and AI data center investment. Despite the recent price decline, uncertainty remains high.