Market News

(Bloomberg) -- Oil fell after President Donald Trump said he’d called off a strike on Iran planned for Tuesday following an appeal by Persian Gulf allies.

Brent dropped toward $110 a barrel, after gaining 2.6% on Monday, while West Texas Intermediate for July was below $104. Trump said in a social media post that the leaders of Saudi Arabia, Qatar and the United Arab Emirates asked “to hold off on our planned Military attack of the Islamic Republic of Iran, which was scheduled for tomorrow, in that serious negotiations are now taking place.”

Oil has rallied on uncertainty about the talks, and the possibility that the near-total closure of the Strait of Hormuz will choke off Persian Gulf energy supplies for longer. Trump has repeatedly threatened renewed military action against Iran without following through, and Tehran didn’t immediately confirm renewed discussions.

“The president’s calling off tomorrow’s ‘scheduled’ attack is a positive,” said Mark Malek, chief investment officer at Muriel Siebert & Co. “The change of plans just shows how stochastic the situation is with negotiations.”

Trump said the US is prepared to attack if an acceptable deal isn’t reached but didn’t set a deadline.

“I put it off for a little while, hopefully maybe forever, but possibly for a little while, because we’ve had very big discussions with Iran, and we’ll see what they amount to,” he said at a White House event on Monday evening, hours after his social media post.

A US naval blockade has left Iran’s Kharg Island oil terminal idle for at least 10 days, cutting off Tehran’s petroleum revenues and withdrawing millions of barrels from the market. That’s a reversal for the Islamic Republic, which had been the strait’s dominant crude exporter after barring other nations’ vessels from the waterway in the opening weeks of the war.

Crude briefly pared gains Monday after Iran’s semi-official Tasnim news agency reported that Washington had proposed a temporary waiver on oil sanctions until a final deal is reached. A US official who refused to be named due to the sensitivity of the matter said the story was false, but didn’t elaborate.

Meanwhile, the US issued a new waiver allowing the sale of Russian crude oil and petroleum products that are already loaded on tankers, days after the previous one lapsed.

--With assistance from Mia Gindis.