EMEA crude futures dropped by over 5% in after-hours trading on Monday after President Trump said there had been "progress" in negotiations with Iran, fuelling expectations of a potential easing in geopolitical tensions in the Middle East.
Brent crude futures tumbled by 6.01% to $97.26 per barrel, while Murban oil futures plunged 8.11% to $93.92/bbl.
President Trump said on Monday that negotiations with Iran are "proceeding nicely". However, the US President said the US would not rush into a deal, and that Washington's blockade of the Strait of Hormuz would remain in place until an agreement was reached.
Trump, in a social media post, urged Middle East countries, including Saudi Arabia and Qatar, to sign up to the Abraham Accords as part of the Iranian peace deal. He added that these countries would be honored to have Iran as part of the accords once a deal to end the war is reached.
"We've been at this stage before, only for talks to break down. Therefore, the market will likely be more cautious about overreacting to these headlines," ING strategists said in a note on Monday.
Iran's foreign ministry spokesperson, Esmaeil Baghaei, said the talks with the US are centered on ending the ongoing Middle East conflict and that "the nuclear issue or the management of the Stratif of Hormuz are not part of the negotiations".
Iranian Parliament Speaker Mohammad Baqer Qalibaf and Foreign Minister Abbas Araghchi are in Doha for talks with Qatar's Prime Minister on a potential deal with the US to end the three-month-old war.
While the US-Iran talks continue, commercial vessels continue to trickle through the Strait of Hormuz, with Iran claiming that 33 vessels moved through the strategic waterway in a 24-hour window over the weekend after obtaining approval.
Three liquefied natural gas tankers reportedly transited the Strait in recent days, heading to Pakistan, China, and India, and a supertanker carrying Iraqi crude for China, after being stranded for nearly three months.
Meanwhile, the Security Service of Ukraine said its drones attacked an oil pumping dispatch station in Russia's Vladimir region on Sunday, adding that the facility plays a pivotal role in pumping oil products southwest to Moscow and its surrounding area.
"This station plays a pivotal role in the main petroleum product pipeline system, transporting raw materials, primarily diesel fuel, from oil refineries in central Russia to export ports and domestic consumers," the SSU said.
Global oil markets have so far avoided a sustained price spike despite the loss of significant Middle Eastern supply, with China's subdued crude appetite emerging as a key stabilizing factor.
Chinese refiners have sharply reduced imports amid weak margins, slowing domestic demand and elevated prices, helping ease pressure on global balances, Kpler strategists said on Monday.
However, the analysts said the buffer may be fading, as inventories are now drawing lower, independent refiners are cutting runs, and state-owned processors are expected to gradually return to the spot market.