WTI crude plunged 10% after Trump said U.S.-Iran deal likely, reopening the Strait of Hormuz. The dollar retreated as safe-haven demand faded, lifting EUR/USD.
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WTI crude plunged 10% on Monday after President Donald Trump said there was a good chance for a deal with Iran. Trump's comments raised expectations of a reopening of the Strait of Hormuz, which has been de facto closed. Brent crude fell below $90 a barrel, settling near $88. WTI tested support in the $81.50-$82.00 range.
Natural gas also pulled back, trying to settle below the $2.75-$2.80 support zone. Weather forecasts pointed to weaker demand.
The sell-off accelerated after reports that Iran and Oman discussed reopening the Strait of Hormuz. According to reports, the Houthis, who control the Bab al-Mandab Strait, are expected to back off if a deal is reached, given their ties to Iran. Trump noted that the U.S. was prepared to fight if negotiations failed. The three-day pause in strikes was seen by traders as a sign of interest in a temporary truce. The de-escalation news reduced safe-haven demand, traders said.
According to AlphaScala's forex market analysis, the dollar retreated against most major currencies. The euro and sterling climbed against the greenback. The yen slipped.
Reports said an announcement about progress in the Strait of Hormuz talks could be made in the coming days.
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