Oil prices tumble as U.S.-Iran pause lifts stock futures
Brent and U.S. crude dropped Monday as a pause in U.S.-Iran fighting cooled inflation fears and sent stock futures higher.
By Georgia Hale · Staff Writer
3 min read
Oil prices tumble was the market’s opening theme Monday, as a pause in fighting between the U.S. and Iran sent crude lower and put Wall Street on track for gains, according to CBS News.
Brent crude, the global oil benchmark, dropped $6.35, or 6.6%, to $90.41 a barrel. West Texas Intermediate, the U.S. benchmark, fell 5.7% to $84.23, CBS News reported.
Stock futures also brightened before the opening bell. Futures tied to the S&P 500 and the Dow Jones Industrial Average were pointing to gains of 1% in early trading Monday, according to the report.
The move marked a quick turn after oil had recently climbed above $100 a barrel, a jump that helped push gasoline prices over $4 a gallon and stirred fresh worries about inflation.
Why did oil prices tumble?
The selloff followed a pause in U.S.-Iran fighting and renewed attention on diplomacy. U.S. Ambassador to the United Nations Mike Waltz said Sunday on “Face the Nation with Margaret Brennan” that the break was meant to give diplomacy “some space.”
Waltz also said the pause was giving diplomacy “a little bit of time” to work, while adding that more U.S. military assets were still “moving into the region,” according to CBS News.
Markets appeared to take the pause as a reason to breathe. CBS News reported that European and Asian markets also rose Monday as investors responded to the diplomatic opening.
Stephen Innes of SPI Asset Management said in a commentary that the retreat in oil did more than lower the price of a barrel. He said it eased the geopolitical pressure that had been weighing on equities, currencies, bonds and central banks through much of July.
What is the Strait of Hormuz issue?
The Strait of Hormuz is a key maritime route in the region, and worries about shipping there can ripple through energy markets because oil prices react quickly to fears over supply and transport risks.
Iran’s government said Monday that it was not taking part in direct talks with the U.S., CBS News reported. After three nights of relative calm, however, Iran acknowledged talks with Oman about creating “mechanisms regarding maritime traffic” in the Strait of Hormuz.
The diplomatic track did not remove all market concerns. CBS News reported that recent jumps in energy prices, along with new tariffs announced last week by the Trump administration, could add pressure to inflation.
That matters for the Federal Reserve’s next move on interest rates. The Fed is expected to hold rates steady at its Wednesday meeting, according to CBS News, but the rise in oil prices had led investors to increase bets that another rate hike could arrive later this year.
For now, Monday’s market reaction showed how quickly traders shifted once the fighting paused: oil fell, stock futures rose, and inflation fears cooled, at least for the morning.
This story draws on original reporting from CBS News.