Brent Falls Below $91 as US and Iran Halt Direct Strikes, Strait of Hormuz Remains Closed

Brent crude fell to $90.84 per barrel in early Monday trading on ICE, down $5.94 or 6.14 percent from Friday's close of $96.78, per OilPrice.com. WTI crude declined to $84.17 per barrel, a drop of 5.76 percent, per OilPrice.com as of early Monday morning. The moves follow the United States pausing its bombing campaign against Iran on Friday, July 25, with Iran confirming a reciprocal halt in retaliatory strikes over the weekend. Henry Hub natural gas also retreated, falling to $2.77 per MMBtu, a decline of roughly 3.5 percent, as reduced LNG demand expectations weighed on domestic gas markets.

How the Strike Pause Unfolded

The United States halted its Iran bombardment on Friday after nearly two weeks of air strikes that followed the collapse of a Pakistan-brokered ceasefire around July 13, per Al Jazeera reporting published Monday. US Ambassador Mike Waltz said the administration was "giving some talks some space," while President Trump described choosing "a smarter strategy" centered on a negotiated deal. Iran's army spokesman Mohammad Akraminia confirmed the reciprocal halt, stating: "Our strategy has essentially been retaliatory. We have also halted our retaliatory operations." Iran's Foreign Ministry said mediators, with Oman playing a central role, were exchanging messages between the two governments.

Hormuz Closure Remains in Effect

Despite the bombing pause, the Strait of Hormuz remains closed to international shipping, per Al Jazeera. Iran and Oman are in active talks over protocols for managing the waterway, but no agreement has been announced. The strait carries roughly 20 percent of global oil trade, making its continued closure a live supply risk even as the market prices out war premium. Iran-backed Houthi forces continued attacks on Saudi Aramco facilities at Red Sea ports over the weekend, adding another layer of physical supply uncertainty that futures markets have not fully priced out.

War Premium Math: What Analysts Say Fair Value Is

Brent surpassed $100 per barrel at the peak of active US-Iran combat, embedding a significant risk premium above every major forecaster's baseline. Oil Authority's July 26 price analysis compiled Wall Street year-end Brent targets ranging from $75 per barrel at Morgan Stanley to $85 under UBS's de-escalation scenario, with Goldman Sachs at $80. UBS analysts noted "the war premium came out of positioning, not out of the supply picture," pointing to technical repositioning rather than genuine supply changes as the driver of Friday's initial move. The EIA's July Short-Term Energy Outlook placed its 2026 Brent forecast at $82 per barrel, assuming gradually rising OPEC+ production and a potential return of Iranian crude.

At Monday's $90.84, the gap between spot Brent and year-end analyst targets runs from $5.84 per barrel above UBS's $85 forecast to $15.84 above Morgan Stanley's $75 estimate. OPEC+ was already scheduled to add production volumes in August, per the EIA's report, compounding downward pressure if the diplomatic track holds. Pakistan and Chinese diplomatic pressure first trimmed the premium on Friday before the confirmed military pause accelerated Monday's selloff in Asian and European sessions. Lebanon's status remains a sticking point, with Iran conditioning any final settlement on Israeli withdrawal, keeping full diplomatic resolution uncertain through the near term.