Oil prices fell sharply on Sunday as the United States and Iran paused military strikes in the Persian Gulf for a second consecutive day, easing supply fears that had driven crude to a two-month high last week, according to a report in The Hindu.
Brent crude for September delivery fell 4.9% to $92.02 a barrel shortly after trading resumed, while US benchmark West Texas Intermediate (WTI) for September delivery dropped 5.6% to $84.34, the report said. The most actively traded Brent October contract declined 4.6% to $87.48. Both benchmarks had also fallen on Friday — Brent by 3.9% and WTI by 3.1%.
Middle East tensions ease, but supply routes remain under pressure
Last week, Brent briefly hit $102 a barrel, the highest since May and $30 above early-month levels, as escalating Middle East conflict disrupted shipping. The Strait of Hormuz, through which a fifth of the world’s oil transits, saw traffic largely halted after the US and Israel attacked Iran in late February, the report noted. In response, oil producers sought alternative routes, but those too came under threat: last week, attacks hit Saudi oil tankers using the Red Sea.
The pause in strikes on Sunday provided temporary relief, but uncertainty persists. The report highlighted that while prices have retreated from last week's peak, much uncertainty still remains.
Higher energy costs threaten inflation and interest rate outlook
In the United States, the average price for a gallon of regular gasoline stood at $4.11 on Sunday, up from $3.90 a month ago and $3.15 a year ago, according to motor club AAA. The report warned that sustained high oil prices could push up costs for shipped, trucked, or flown goods, including groceries, and have already dragged US consumer confidence lower.
The oil price surge comes just as inflation had begun slowing more than expected. However, traders now see a 36% chance that the Federal Reserve will hike its main interest rate at an upcoming meeting, based on CME Group data. Higher rates would curb inflation but could also slow the economy by raising borrowing costs. US mortgage rates have already hit near-year highs, chilling the housing industry, and more expensive borrowing may slow the boom in AI data centers, a key growth engine.
Key price movements at a glance
| Contract | Price (Sunday) | Weekly change (%) |
|---|---|---|
| Brent crude (Sept delivery) | $92.02 | -4.9% |
| WTI (Sept delivery) | $84.34 | -5.6% |
| Brent crude (Oct delivery) | $87.48 | -4.6% |
Source: The Hindu, based on Sunday trading data.
Uncertainty persists despite retreat
While the immediate threat of strikes has receded, the report emphasized that the oil market remains volatile. The ability to safely navigate the Strait of Hormuz and the Red Sea continues to shape supply expectations. Traders are now watching for any further diplomatic developments or military actions that could reverse the price decline. The report, published on July 27, 2026, noted that the US gasoline price data from AAA and the Fed rate hike probability from CME reflect the broader economic stakes of the energy market turmoil.
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