U.S. oil prices fell sharply on Monday as diplomats look to de-escalate the ongoing conflict in the Middle East. West Texas Intermediate crude for August delivery dropped 3% to settle at $73.60 per barrel. The international benchmark, Brent crude for September delivery, fell 3.5% to $77.27 a barrel.
The sudden drop in crude valuations follows a major policy shift from Washington. The U.S. Treasury Department waived sanctions on Iranian oil for 60 days. This temporary authorization is part of an interim roadmap brokered over the weekend in Switzerland, utilizing mediators from Qatar and Pakistan to establish a path toward a final peace deal.
U.S. Treasury Secretary Scott Bessent confirmed the move on X, stating the administration authorized Iranian oil sales through August to alleviate fears of critically low global supplies. Investors quickly priced in the new supply, pulling U.S. oil prices lower during early trading sessions.
The decline puts WTI on a seven-day losing streak. This is the longest sustained drop for the benchmark since July 2025. Both WTI and Brent are now trading at their lowest settlement levels since March 2, the first trading day following the initial conflict escalation on February 28.
The Disconnect Between Physical Shipping and Paper Oil Prices
Despite the market optimism driving paper crude prices down, the physical transport of oil remains constrained. Traffic through the Strait of Hormuz is operating well below pre-conflict levels.
The 60-day waiver allows Iranian oil back into the legal market, but commercial shipping companies are still avoiding the critical regional chokepoint. Until physical transit volumes recover, the current price relief relies heavily on the diplomatic roadmap holding together through the August deadline.