Oil Slumps 9% as Trump Signals Swift End to Iran Conflict

Global crude prices collapsed on Monday, with Brent futures falling 9.3% to $78.20 per barrel, while West Texas Intermediate (WTI) dropped 9.5% to $74.10, marking the largest single-day decline in over two years. The sharp reversal followed a public statement by President Donald Trump indicating that military operations against Iran would end within weeks, removing a persistent threat to Strait of Hormuz shipping lanes. The announcement fundamentally altered market perceptions of supply risk. Prior to the statement, geopolitical tensions had kept oil prices near $85 per barrel, with traders pricing in sustained disruptions from Iranian naval activity and potential strikes on key infrastructure. The sudden de-escalation erased those premiums, triggering a rapid repricing of energy assets across the board. The volatility index (^VIX) dropped 18% to 14.7, signaling a sharp decline in market uncertainty. Energy stocks reacted swiftly: ExxonMobil (XLE) fell 5.2% amid concerns over reduced defense spending and shifting fiscal priorities. Meanwhile, oilfield services and drilling firms saw their equity values decline, with the S&P 500 Energy Sector down 6.4% in early trading. The shift underscores how rapidly energy markets respond to geopolitical signals. With Iran’s oil exports expected to resume full capacity within two months, global supply projections now show a surplus of 1.3 million barrels per day by Q3 2026. This reversal is expected to influence OPEC+ decision-making and could pressure the group to extend output cuts to stabilize prices.