West Texas Intermediate crude fell about 6.2% on Monday morning, to around $79.45 a barrel, a drop of roughly $5. Brent slid more than 3.5% to about $79.30. The trigger was a Trump post, not a change in supply.
The president signaled on Sunday that he was holding off on fresh strikes against Iran. His stated reason: US allies in the Middle East had reached an outline of an agreement to end the war. In his words, the deal would “include the Immediate, Complete and Total OPENING OF THE HORMUZ STRAIT, and an end to Iran’s nuclear threat.” Trump said negotiations would begin Monday afternoon.
Strategically, the Strait is the whole story. Shipments of oil through it have been constrained by the threat of Iranian attacks and by mines. Any credible path to reopening it moves the price, and traders moved first.
Tehran says no talks exist
Iran’s side of the account was different. A foreign ministry spokesman, quoted in a Reuters report, said no negotiations with the US were happening or scheduled. He said the only talks under way were with Oman, on how the Strait is managed.
That gap matters for the market. Prices are reacting to one government’s description of a deal that the other government says is not being negotiated.
How far prices have travelled
Earlier this year crude spiked above $110 a barrel. Tanker traffic fell sharply as Iran threatened missile and drone strikes and mines were laid in the shipping lanes. Before the fighting, oil sat between $60 and $70.
US consumers absorbed the increase. Regular gasoline averaged $4.095 a gallon nationally on Monday, up 7% from a month ago and 30% from a year ago. That squeezes household budgets, and it explains why the White House wants lower prices quickly.
Trump pressed the point on Truth Social. He said Chevron chief executive Mike Wirth explained “all of the reasons that his company is doing so well” in an interview with Fox Business’s Maria Bartiromo, then argued his administration had helped create that success. The post continued: “As an example, they threw Mike and Chevron out of Venezuela, but now they’re back, far bigger and stronger than ever before, expecting to make a fortune!” He told oil companies to cut retail prices.
The administration has already accused gas stations of padding profit margins. Representatives of smaller stations and energy marketers reject that. Retail prices follow oil, they argue, but usually take several weeks to come down because stations must turn over inventory bought at higher cost.
Fox Business noted the oil move came despite uncertainty about whether the Federal Reserve will raise interest rates.
