Oil Plummets Below $100 as Iran Diplomacy Eases Fears, Stocks Jump
Oil prices fell below $100 a barrel on Monday, heading for their longest losing streak since June, as crude continued to flow freely through the Strait of Hormuz and diplomatic efforts eased concerns about the US-Iran conflict [246580][246582]. Stocks and bonds rose as lower oil prices eased inflation fears, with the S&P 500 erasing its losses for the month [246586].
Brent crude, the global benchmark, dropped as much as 4.2%. West Texas Intermediate (WTI), the US benchmark, fell over 5% to trade near $95 a barrel [246582].
The decline came after satellite data showed Saudi Arabia loaded more oil from its main Persian Gulf port over the weekend than at any time since June, suggesting the kingdom has shifted back to shipping through the Strait of Hormuz [246582]. Earlier this month, drone attacks forced Saudi Arabia to shut down a key pipeline that carried oil to the Red Sea [246582].
The Strait of Hormuz is a narrow waterway in the Middle East. About one-fifth of the world's oil passes through it, making it the most important oil shipping route on the planet [246580][246582].
Two factors cooled the recent rally. First, oil shipments through Hormuz continued to flow without disruption. Second, diplomatic efforts around the US-Iran war reduced fears of a wider conflict [246580]. Together, these developments eased supply concerns and pushed prices lower [246580].
Stocks and bonds started the week higher as hopes for diplomacy to end the war in Iran pushed oil prices down. Investors welcomed the news, betting that less fighting in the Middle East could mean more stable energy costs [246578]. The rise in stocks erased the S&P 500's losses for the month. A new rally in chipmaker shares also lifted market mood [246586].