Brent crude oil dropped below $98 per barrel for the first time in three weeks on Monday as markets began pricing in a partial reopening of the Strait of Hormuz following progress in US-Iran ceasefire talks. West Texas Intermediate fell in tandem to $95.40, down 2.3 per cent on the session.

The decline was driven by reports that two Chinese-flagged tankers successfully transited the Strait over the weekend without incident — the first commercial vessels to do so since hostilities effectively shut down the waterway in mid-March. Both vessels were broadcasting Chinese ownership signals, a step typically taken when seeking Iranian clearance, suggesting at minimum a tacit agreement to permit certain flagged vessels through.

Despite the pullback, oil prices remain roughly 35 per cent above pre-conflict levels, reflecting the market's assessment that a full normalisation of Hormuz transit remains distant. OPEC+ acknowledged last week that physical damage to production infrastructure across the Gulf will constrain output well beyond any diplomatic resolution, placing a floor under prices even in an optimistic scenario.

Natural gas markets were less responsive to the ceasefire signals, with Henry Hub holding steady at $2.80 per MMBtu. European gas prices on the TTF benchmark remain elevated on concerns about LNG supply chain disruptions that may persist regardless of the outcome in the Gulf.

Goldman Sachs revised its Q3 Brent forecast down to $92 from $105, conditional on the Strait reopening to broad commercial traffic by June. The bank noted that a failure of the current diplomatic track could push prices back above $110 within days.