Oil prices tumbled 7% on Sunday after a senior Iranian official told Reuters that Tehran will stop its own attacks as long as the United States keeps its bombing pause in place. Brent crude fell to a low of $90.9 per barrel, while West Texas Intermediate touched $84. The drop erased gains from earlier in the week and left traders wondering whether the ceasefire will stick.
Why the price drop stuck
The Iranian source described Tehran's stance as 'attack for attack' and said Iran will stop its operations once the US stops. That conditional language gave markets a clear trigger for de-escalation — and a clear risk if it fails. By Monday, Brent crude held near $92 a barrel, confirming Sunday's drop was not a quick blip but a sustained repricing. The pause follows Washington's decision to suspend its bombing campaign after 13 nights of US strikes. Advisers reportedly warned President Donald Trump that the military was running low on viable targets and raised concerns about depleting weapons stockpiles.
The diplomatic pause
US Ambassador to the United Nations Mike Waltz said Trump chose the pause to give diplomacy room. But Iranian officials voiced more doubt than hope that the pause will last. The gap between Washington's stated goal of opening a diplomatic window and Tehran's skepticism underscores the fragility of the current calm. Neither side has committed to a formal ceasefire, leaving the door open for a resumption of hostilities — and another oil price spike.
HSBC US rates strategist Dhiraj Narula said pricier oil has revived bets that the Federal Reserve may hold rates higher for longer. Narula noted inflation expectations have stayed contained so far, crediting firm Fed messaging on price stability. But if oil stays near $92 or climbs again, those expectations could shift. The central bank's next rate decision will have to weigh whether the drop in crude is a temporary reprieve or the start of a sustained decline.
The key question now: will the Iranian halt hold? If it does, oil markets may stabilize. If it doesn't, the selloff could reverse just as fast as it arrived.
