Oil prices dropped significantly on Monday following a temporary halt in military actions between the US and Iran, sparking hopes for a possible end to the conflict that has destabilized oil and gas markets for nearly five months.

At the start of US trading, the price of Brent crude fell below $90 per barrel for the first time in a week, dropping more than 8% to just under $89 per barrel. West Texas Intermediate (WTI) crude declined by 7.5%, reaching $82.60 per barrel. For comparison, on Thursday, Brent futures were trading around $100 per barrel, and WTI was near $92 per barrel, driven by fears of a prolonged standoff between the US and Iran.

Over the weekend, relative stability returned to the Persian Gulf, and signs emerged of renewed diplomatic efforts to broker a ceasefire with Oman acting as mediator. This pause in hostilities lasted for about three days.

Nevertheless, concerns remain about potential disruptions to oil supplies, especially after last week’s announcement by Yemen’s Houthis of a naval blockade of the Red Sea and their entry into the conflict, which also impacted the market.

The decline in oil prices reflects the market’s need for positive news. However, the reasons for the de-escalation remain unclear, and there have been virtually no official explanations from the US. Additionally, there has not yet been a significant increase in shipping through the Strait of Hormuz. The resumption of transportation is likely only possible with sustained de-escalation and the absence of threats to vessels.

The threat of further action by the Houthis could have a substantial impact on oil markets, as about 7 million barrels of Saudi oil are exported daily through pipelines to the Red Sea.

It is also noted that the drop in oil prices may be short-lived. Despite discussions between Iranian and Omani representatives regarding shipping in the Strait of Hormuz, reports have emerged that Iran intercepted six vessels attempting to pass through the strait in Omani waters. This indicates that the strait remains closed, and it is still unclear whether progress in negotiations will satisfy the parties’ demands or if a continued blockade will prompt new actions from the US.