Oil prices fell by over 5 percent on Monday, their biggest decline in more than six months, after de-escalation between the United States and Iran.
Brent crude futures dropped $3.5, or 5 percent, to $65.8 per barrel by 14:42 Pakistan Standard Time (PKT), while US West Texas Intermediate fell $3.5, or 5.3 percent, to $61.75 per barrel.
Both benchmarks retreated from multi-month highs after US President Donald Trump said Iran was engaged in serious talks with Washington.
The decline was compounded by last week’s sharp losses in gold and silver, which was partly attributed to renewed strength in the US dollar. According to the Kobeissi Letter, both gold and silver lost roughly $10 trillion in value in just two days.
Also, a stronger dollar typically pressures dollar-denominated commodities by making them more expensive for non-US buyers.
Oil prices had been supported through January by repeated US warnings of intervention if Iran did not agree to a nuclear deal or continued domestic crackdowns. However, sentiment shifted over the weekend.
Additional signs of de-escalation included reports that Iran’s Revolutionary Guards naval forces were not planning live-fire exercises in the Strait of Hormuz. Markets interpreted these developments as reducing the likelihood of near-term supply disruptions. This dropped oil prices.
Despite periodic geopolitical risks, global market fundamentals remain bearish. Oil, gold and silver could lose more value in the coming days as several risk factors cool off.
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