Oil prices dropped on Monday morning following President Donald Trump’s announcement that the U.S. would delay attacking Iran’s energy infrastructure due to positive discussions between the two nations. The price of West Texas Intermediate, a key North American benchmark, fell by over nine percent to under $90 US per barrel, while stock markets surged at the opening bell. By the close of trading, the S&P 500 had climbed 74.52 points to 6,581.00, the Dow increased by 631.00 points to 46,208.47, and the Nasdaq composite rose by 299.15 points to 21,946.76. The S&P/TSX composite index also saw a boost, gaining 566.40 points to reach 31,883.81.
President Trump revealed that he was postponing strikes on Iranian power plants for five days following “very good and productive conversations” aiming for a resolution of tensions in the Middle East. Oil prices have surged by around 50 percent since the conflict began in the region.
Trump’s recent statement marks a departure from his previous remarks over the weekend, where he had threatened an escalation in the conflict. In response, the Islamic Revolutionary Guard Corps warned of completely shutting down the Strait of Hormuz if the U.S. targeted Iran’s energy infrastructure. Trump outlined military objectives for the Iran conflict, including degrading or destroying Iran’s military capabilities, defense infrastructure, and nuclear program, while also ensuring the safety of American allies in the area.
Energy prices have been on the rise due to Iran’s restrictions on the vital Strait of Hormuz, a key route for global oil exports. Analysts from energy consulting firm Wood Mackenzie suggest that oil prices could reach $200 per barrel in 2026 if the disruption in Gulf exports persists. According to Kurt Barrow, an oil and fuels analyst at S&P Global, it may take a couple of months for the energy markets to stabilize once the conflict is resolved.
The North American oil industry is facing uncertainty amid the ongoing crisis. If oil prices remain high for an extended period, there could be a significant drop in demand, especially in the event of a global economic downturn. Kevin Krausert, CEO of Avatar Innovations and former drilling executive in Alberta, emphasized the seriousness of the situation, noting that prolonged high oil prices pose challenges for the industry. Trump’s social media post about potential strikes comes as the conflict with Iran enters its fourth week.