NEW YORK — Oil prices pulled back on Monday after select tankers navigated the Strait of Hormuz over the weekend, easing — but far from eliminating — fears of a catastrophic energy supply shock stemming from the ongoing U.S.-Israel conflict with Iran. International benchmark Brent crude futures fell approximately 2.8% to settle around $100.21 per barrel, while U.S. West Texas Intermediate futures declined more than 5% to close at $93.50, retreating from levels above $103 seen at the end of last week.
The limited transit of vessels through the strait provided a psychological boost to energy markets. Vessel-tracking data from MarineTraffic confirmed that the Aframax tanker Karachi — carrying Abu Dhabi crude — became the first non-Iranian cargo ship to broadcast an AIS signal while crossing the waterway since the maritime crisis intensified. Two Indian-flagged liquefied petroleum gas carriers also completed transits after receiving rare clearance from Tehran, arriving safely at ports in western India.
U.S. Treasury Secretary Scott Bessent, speaking from Paris where he is attending trade talks with China, told CNBC that Washington has been allowing Iranian oil tankers to transit the strait to prevent further shock to global supplies. Bessent added that oil prices should fall well below $80 per barrel once the conflict concludes, though he declined to predict a timeline for the war's end.
President Trump, meanwhile, pressed allied nations to contribute naval assets to a coalition protecting tanker traffic through the strait. Trump said announcements about participating countries were imminent, though he acknowledged that some nations were "less than enthusiastic." Germany, Greece, and the United Kingdom have all declined military involvement, citing opposition to the war itself. A retired U.S. Navy rear admiral told CBS News that deploying escort vessels would take at least two weeks.
The partial easing of energy pressure had meaningful downstream effects on Monday's equity session. Airline stocks, travel companies, and consumer discretionary names — which had been hammered by surging jet fuel and gasoline prices — rebounded sharply. Homebuilders also recovered ground as falling crude prices reduced inflation expectations and allowed Treasury yields to retreat across the curve, benefiting rate-sensitive sectors including financials and real estate.
Still, analysts cautioned against complacency. Iran continued launching ballistic missiles and drones at neighboring Gulf states throughout Monday, with Qatar intercepting 13 of 14 missiles from a single salvo and Saudi Arabia neutralizing 35 Iranian drones targeting its eastern oil region. The International Energy Agency estimates global oil supplies could fall by 8 million barrels per day this month — the largest supply disruption in history — and the 400 million barrels released from emergency reserves worldwide would cover only roughly 20 days of normal Hormuz flows at best.
For equity investors, the energy situation represents a binary event risk: a credible diplomatic resolution could unlock a rapid oil price normalization and broad market re-rating, while an escalation targeting Iran's Kharg Island oil export terminal could accelerate prices toward the $200 per barrel level that Iranian military officials have publicly threatened.