Oil prices slipped on Monday after U.S. President Donald Trump announced a pause on planned military strikes against Iran, easing immediate fears of a major escalation in the Middle East.
West Texas Intermediate, the North American benchmark, fell more than seven per cent to under $90 USD per barrel, reversing part of the sharp run‑up seen over the past month. The drop in crude helped lift investor sentiment, with the Dow Jones Industrial Average, S&P 500 and Nasdaq all opening higher.
Trump said the United States would delay potential attacks on Iran’s power infrastructure for five days, pointing to what he described as “very good and productive” discussions aimed at reducing tensions.
His tone marked a noticeable shift from the weekend, when he warned that the U.S. would begin striking Iranian power plants if the Strait of Hormuz was not reopened to international shipping within 48 hours.
Iran’s Islamic Revolutionary Guard Corps quickly countered that any move against its energy assets would lead to a full shutdown of the vital waterway, which carries roughly one‑fifth of the world’s oil supply.
The standoff has pushed energy prices up roughly 50 per cent in recent weeks as Iran continues to restrict access through the narrow Gulf choke point used to export crude, natural gas and other petroleum products.
Analysts warn that a prolonged disruption could have dramatic consequences. Consulting firm Wood Mackenzie has said oil prices as high as $200 USD a barrel in 2026 cannot be ruled out if Gulf shipments remain constrained.
Even if hostilities ease soon, analysts say the global energy system is unlikely to recover quickly.
Kurt Barrow of S&P Global told CBC News that the market is facing broad shortages, not just of crude but also of jet fuel, diesel and gasoline, estimating a shortfall of about 15 million barrels per day across key products. He said it would take months for supplies and logistics to return to normal even after a resolution.
Despite the rally in oil prices, many North American producers remain cautious. Sector leaders say the current environment is too volatile to make major investments, and there is concern that extremely high prices could trigger a steep drop in demand if fuel becomes unaffordable or a broader economic downturn follows.
Kevin Krausert, CEO of Avatar Innovations, said the industry is treating the moment with seriousness rather than celebration, warning that sustained prices above $120 USD could create challenges of their own.
Trump’s decision to delay strikes comes as the conflict with Iran enters its fourth week, with tensions still high and global markets watching closely for signs of either de‑escalation or renewed confrontation.
