Oil prices dropped sharply by about 5% following reports that Iran signaled it would halt attacks if the United States maintains a pause in hostilities. This development helped ease tensions that had escalated over nearly two weeks of conflict. As a result, Brent crude futures for September delivery decreased to around $91.97 per barrel, while U.S. West Texas Intermediate crude for the same month fell to $84.67 per barrel.

According to a senior Iranian official cited by Reuters, Tehran’s stance now aligns with a conditional "attack for attack" policy, meaning Iran will cease attacks as long as the U.S. does the same. This message has reportedly been communicated to Washington, coinciding with the U.S. decision to pause its bombing campaign. The pause was reportedly influenced by warnings from President Donald Trump’s advisers about dwindling viable military targets and concerns over depleting weapon stockpiles.

U.S. Ambassador to the United Nations Mike Waltz affirmed on Fox News that the pause in strikes was strategically chosen by President Trump to provide room for diplomatic efforts to progress. This development comes amid ongoing geopolitical instability, particularly in the Strait of Hormuz, a vital shipping corridor that had been nearly blockaded since the conflict's outset in February. The tentative reduction in hostilities could impact oil supply routes and market dynamics going forward.

HSBC strategist Dhiraj Narula noted that while higher oil prices had increased speculation that the Federal Reserve might maintain tighter monetary policy, inflation expectations remained relatively stable despite the energy price rally. He credited this resilience to the Federal Reserve's strong communication on its commitment to price stability, which has helped prevent the recent oil shock from affecting long-term inflation outlooks.