Oil and Gas Prices Plunge After US-Iran Mutual Pause: What Happened, How Far Prices Fell, and What Comes Next

Energy markets experienced a dramatic reversal at the start of the week as a mutual pause in military strikes between the United States and Iran triggered a sharp selloff in oil and European natural gas prices. The de-escalation unwound a significant geopolitical risk premium that had built up over the previous week, when Iran-backed Houthi attacks on Saudi oil tankers in the Red Sea pushed Brent crude above $100 a barrel for the first time in two months.

What Caused the Sharp Drop: The US-Iran Mutual Pause

The trigger for the selloff was a mutual halt in hostilities between the United States and Iran over the weekend of July 25–26, 2026. The US had held off strikes on Iran since late on July 24, after bombing the Islamic Republic for 13 consecutive nights . Tehran confirmed it had also paused its attacks, clearing the way for renewed diplomatic efforts to revive an interim ceasefire deal . The US "refrained from striking Iran" since July 24 , and both sides observed the halt for a second straight day on Sunday, July 26 .

The pause came after a period of intense escalation. The US had been striking Iranian coastal areas and infrastructure in a nearly two-week campaign sparked by Iran's firing at ships trying to transit the Strait of Hormuz . While the White House framed the halt as an opportunity for diplomacy, concerns over US munitions stockpiles and the risks of a wider regional conflict also emerged as factors behind the decision .

How Far Prices Fell From Their Peaks

The selloff was broad and sharp across both crude oil and natural gas markets.

Brent crude fell more than 7% in early trading on Monday, July 27, briefly slipping below $90 a barrel. By later in the session, it was trading around $91.44, down 5.5% from Friday's close . This compares with a recent peak of $101.06 on July 24, after the Houthi attacks, and an earlier war-time peak of $126.41 from April 30 . The move marked a significant unwinding of the geopolitical risk premium that had built up in July alone.

West Texas Intermediate (WTI) crude fell more than 5% at the open, dropping to around $89.31 a barrel, down 3.1% . WTI had previously risen to $91.08 during the Houthi-driven rally peak .

European natural gas (the benchmark Dutch TTF front-month contract) fell an estimated 7.7% at the open on Monday, as the de-escalation eased immediate fears over shipping and supply chains through the Strait of Hormuz .

The magnitude of the declines echoed previous ceasefire-driven selloffs during the conflict. In April 2026, a two-week truce had sent Brent tumbling 15.5% and WTI falling 16.5% in a single day . In May 2026, reports of a potential deal pushed Brent down as much as 9.4% and WTI nearly 11% .

The Houthi Attacks That Pushed Brent Above $100

The rally that preceded the selloff was driven by a major escalation in the Red Sea. On July 22–23, 2026, Iran-backed Houthi militants attacked two Saudi-flagged oil tankers — the Encelia and the Layla — in the Red Sea . The Houthis said they fired missiles and drones at the vessels to enforce a blockade of Saudi ports announced that week .

That attack opened a "second front" in the Middle East war , with the Bab al-Mandab Strait now at risk alongside the already near-shuttered Strait of Hormuz . Brent crude surged about 7% in a single day to settle at $100.69 on July 23, its first time above $100 since May . WTI rose more than 5% to $91.08 . The rally extended into July 24, with Brent reaching $101.06 . Dated Brent, the benchmark for physical cargoes, climbed above $105 a barrel for the first time since late May .

Statements From the White House and Regional Mediators

White House Communications Director Steven Cheung told Fox News that "all options remain on the table regarding Iran," reiterating that President Trump continues to favor a diplomatic resolution but keeping military options open . Cheung added that if Iran continues hostile activities in the Strait of Hormuz or against US allies, the president is prepared to consider all available options .

Meanwhile, mediator Qatar had previously said the US and Iran made progress in talks over ending the four-month war . During the mutual pause, diplomats continued urging Iran to pursue a deal, with the understanding that technical talks were slated to continue on all areas of the memorandum of understanding . An unnamed US official told AFP that "both sides will stand down for now and vessels can move freely" in and around the Strait of Hormuz .

How Fragile Is the Pause? Lingering Risks

The mutual pause is widely seen as fragile. The underlying structural issues that drove the conflict — including Iran's nuclear ambitions, the near-total closure of the Strait of Hormuz, and the risk of renewed hostilities — remain unresolved . Analysts have warned that without progress on Iran's nuclear program and a consensus regarding Iran's regional affiliates, the situation could rapidly escalate again .

The US has maintained its naval blockade against Iranian ports and vessels even during the pause . The Institute for the Study of War noted that the present intensity and nature of US military strikes "appear insufficient to significantly alter the Iranian regime's determination to achieve its strategic goals through force, which includes maintaining long-term dominance over the Strait of Hormuz" .

Specific analyst warnings from Daniela Hathorn or UBS about this particular pause were not found in available search results. The search budget was reached before locating those specific quotes. However, the available sources consistently note that analysts warned the pause is inherently fragile given the unresolved structural issues .

Key Takeaways

Measure	Peak (Recent)	Post-Pause	Decline
Brent crude	$101.06 (July 24)	~$91.44	~5.5%–7%+
WTI crude	$91.08 (Houthi rally)	~$89.31	~3.1%–5%+
European TTF gas	Pre-pause level	7.7% drop at open	~7.7%
Brent all-time war peak	$126.41 (April 30)	—	—

Note: The $126.41 war-time peak from April 30 remains the highest level reached during the conflict . The July 2026 selloff brought prices back below the psychological $100 threshold, but they remain significantly elevated compared to pre-conflict levels of around $72 a barrel .

What Happens Next

The path forward depends on whether the mutual pause can translate into a durable ceasefire. The White House has sent conflicting signals: while the administration says it favors a diplomatic resolution, it has also explicitly kept all options open, including the possibility of major strikes on Iran . President Trump had previously agreed to and then walked back a two-week truce with Iran in April 2026 , and declared the ceasefire "over" on July 8 after a renewed round of tit-for-tat attacks .

European natural gas markets also face a precarious situation. While the immediate supply-chain fears through the Strait of Hormuz have eased, European gas storage remains significantly lower year-over-year at 54.2% capacity , leaving the continent vulnerable to any renewed disruption. The TTF benchmark had already been sensitive to Hormuz-related supply risks throughout the conflict .

For now, traders have unwound a portion of the war premium, but the underlying risks remain very much in play. The market is watching for the outcome of technical talks in Qatar, any new Houthi strikes on Red Sea shipping, and whether the mutual pause holds long enough for a more comprehensive agreement. As one analyst recently put it, the situation is "a distinctly binary scenario; if an agreement is reached, prices will likely decrease, but if no agreement materializes, we may not have hit the peak yet" .