Oil prices fell below $90 a barrel on Tuesday as a temporary halt in hostilities between the United States and Iran raised hopes for renewed diplomatic efforts and the potential reopening of the Strait of Hormuz. Brent crude futures dropped as much as 8 percent, reaching $87.55 per barrel before settling at $89.57 in London trading. This marks a significant decline from last week’s spike above $100, which was driven by escalating tensions in the Middle East.

The recent price movements come amid a three-day pause in attacks following a period of intensified conflict. The flare-up began two weeks ago when Iran targeted vessels attempting to navigate the strategically important Strait of Hormuz, a waterway through which nearly 20 percent of the world’s crude oil passes. Concerns over potential closures of the strait had previously pushed oil prices sharply higher, reflecting the critical role the channel plays in global energy supplies.

Efforts to mediate the conflict have taken place in neighboring countries, as officials seek to bring the United States and Iran back to the negotiation table. The two countries had reached an interim peace agreement in April, but talks quickly unraveled, leading to a resurgence in hostilities that sent crude prices soaring.

Market analysts have welcomed the recent lull in violence. Russ Mould, investment director at AJ Bell, noted that lower oil prices could ease inflationary pressures, particularly in the United Kingdom. This development may influence the Bank of England’s upcoming interest rate decision, scheduled for Thursday, when analysts largely expect a hold at 3.75 percent.

The evolving situation remains closely watched by global markets, as any further escalation or resumption of attacks in the region could once again disrupt supply routes and push prices higher. For now, the pause offers a tentative window for diplomacy amid ongoing uncertainty in the global energy landscape.