Washington: Oil prices fell more than 5% on Monday after US President Donald Trump announced that peace talks with Iran would resume later in the day, following his decision to cancel a planned military strike against Tehran.

According to Anadolu Agency, the international benchmark Brent crude dropped to around $83.40 per barrel as of 0605GMT, while the US benchmark West Texas Intermediate (WTI) also declined 6% to $79.60. The sharp retreat in prices was attributed to the prospects of renewed diplomacy, which eased concerns over further disruptions to energy supplies from the Middle East.

Trump stated that key US allies in the region, including Saudi Arabia, had urged him to suspend the attacks and prioritize negotiations. He also reiterated the importance of reopening the Strait of Hormuz, one of the world's most critical oil transit routes, without delay.

Brent prices had surged about 25% in July after renewed hostilities between the US and Iran shattered an interim peace agreement, leading to intensified supply disruptions extending from the Strait of Hormuz to the Red Sea. The conflict had raised concerns over crude and petroleum product shipments through the region, causing upward pressure on oil prices throughout the month.

Meanwhile, major OPEC+ producers approved another modest increase in production quotas, completing the planned restoration of output cuts introduced in 2023. The group also left room to raise supplies further once the Middle East conflict ends, contributing to the downward pressure on prices.