Crude oil prices experienced a sharp decline on Monday, 3 August 2026, following an announcement by Donald Trump that planned strikes on Iran had been cancelled. The decision aims to shift focus towards negotiations for a peace deal in the Middle East.
Brent crude, a global benchmark, was trading 5% lower at $83.50 a barrel by mid-morning, having earlier fallen to $81.55 a barrel. US West Texas Intermediate also saw a significant drop, falling by more than $5 to $79.47 a barrel.
Both global oil benchmarks had previously surged by over 20% in July due to renewed fighting between the US and Iran, alongside attacks on tankers in the Strait of Hormuz, which raised concerns about shipping safety.
European stock markets responded positively to the news, with the pan-European Stoxx 600 index rising by 0.4%. Energy stocks, however, declined by 2%, while travel and leisure shares gained 2.1%.
Kathleen Brooks, research director at broker XTB, suggested that the fall in oil prices could help support markets and ease inflation fears. She also noted it might act as a dampener on bond yields, which had risen sharply last week.
On Sunday, the Organization of the Petroleum Exporting Countries and its allies (Opec+) agreed to increase oil production by approximately 188,000 barrels a day from September, unwinding previous output cuts. However, export disruptions from the Gulf, Russia, and Kazakhstan, caused by the Iran and Ukraine wars, have meant production increases by Opec+ have had little impact on prices.