U.S.-Iran Tensions Ease! Middle East Supply Risks Cool as Oil Prices Plunge 5% at Open, Stocks, Bonds, and Gold Rebound

After three consecutive weekly gains and Brent crude surpassing the $100-per-barrel mark last week, international oil prices declined during early Asian trading on August 27, as the United States refrained from launching further attacks on Iran—ending a 13-night streak of military strikes.

In early trading, September Brent crude futures fell approximately 5% to around $91.90 per barrel, briefly dipping below $90 and reaching a low of $89.58. West Texas Intermediate (WTI) futures also plunged 5%, trading around $84.70 and briefly falling to $83.16—both marking their lowest levels in nearly a week.

The U.S. military halted airstrikes against Iran on the evening of July 24, with no further attacks launched on July 25 or 26. Iran’s military stated that its retaliatory deterrence strategy meant that once the U.S. ceased hostilities, Iran would also suspend its counteractions.

According to The New York Times, President Trump’s decision to pause was partly due to warnings from Vice President Vance and the Chairman of the Joint Chiefs of Staff about dwindling Patriot missile interceptor inventories, as well as to create space for diplomatic negotiations. Iranian sources indicated that Tehran would halt operations as long as the U.S. refrained from military action, though they remain skeptical of American intentions.

Markets quickly reassessed transit risks through the Strait of Hormuz and the Red Sea. Prior to the de-escalation, U.S.-Iran tensions had narrowed commodity shipping flows through the strait, while Houthi attacks further reduced traffic through the Bab el-Mandeb Strait, disrupting Saudi Arabia’s oil exports to Asia.

Data from Kpler showed fewer than 10 commodity vessels passing through the Strait of Hormuz daily over the past weekend.

Kavonic, an analyst at MST Marquee, cautioned that shipowner confidence would recover slowly, noting, “The rebound in shipping activity may be localized and gradual.”

As oil prices shed their “war premium,” cross-asset markets reset. S&P 500 futures rose 0.58%, Nasdaq futures jumped about 1%, the 10-year U.S. Treasury yield fell 4 basis points to 4.63%, the dollar weakened, and the euro rose to 1.1406 against the dollar.