Oil prices plunged about 4% during Monday's trading session, following remarks by US Vice President JD Vance in which he indicated tangible progress in negotiations with Tehran, while affirming that the Strait of Hormuz remains open to shipping traffic.
Brent crude fell $3.18 to settle at $77.39 per barrel, after earlier in the same session rising as high as $82.30, driven by President Donald Trump's threats to resume military operations against Iran and Tehran's announcement that it was closing the strait. Similarly, West Texas Intermediate declined $2.15 to $74.45, while the more actively traded August contract lost $2.49 to reach $73.36 per barrel.
On the diplomatic front, senior officials from both countries concluded the first round of talks held in Switzerland, under a memorandum of understanding the two sides reached last week that provides for extending the ceasefire in place since April by at least 60 additional days. However, Tehran stated that it did not address its nuclear file and made no new commitments during these sessions.
On the supply side, Washington has authorised the sale of Iranian oil through 21 August, while Tehran resumed its oil exports, which had halted following the US naval blockade. Ship-tracking data confirmed that two crude tankers carrying approximately 2 million barrels transited the strait during the day.
In a parallel development, the United Arab Emirates, Kuwait, and Iraq all increased the volumes of oil offered to their customers, with Iraq announcing its intention to gradually raise production to between 4.2 and 4.3 million barrels per day. ANZ Bank forecast that between 2 and 3 million barrels per day would be restored within the first four weeks, while cautioning that the sustainability of this recovery depends on regional stability.