Oil prices dropped sharply on Monday after President Donald Trump said the U.S. and Iran held productive talks, prompting him to pause planned strikes on the country’s key energy infrastructure.

Brent crude fell more than 6 per cent to $105.09 per barrel after rising above $112 on Friday, while West Texas Intermediate futures declined nearly 6 per cent to $92.29 per barrel.

“I AM PLEASE TO REPORT THAT THE UNITED STATES OF AMERICA, AND THE COUNTRY OF IRAN, HAVE HAD, OVER THE LAST TWO DAYS, VERY GOOD AND PRODUCTIVE CONVERSATIONS REGARDING A COMPLETE AND TOTAL RESOLUTION OF OUR HOSTILITIES IN THE MIDDLE EAST,” Trump said in a Truth Social post.

“I HAVE INSTRUCTED THE DEPARTMENT OF WAR TO POSTPONE ANY AND ALL MILITARY STRIKES AGAINST IRANIAN POWER PLANTS AND ENERGY INFRASTRUCTURE FOR A FIVE DAY PERIOD,” Trump wrote.

The post followed Trump’s 48-hour ultimatum for Iran to reopen the Strait of Hormuz, though it remains unclear when the critical shipping route will resume operations.

The Strait of Hormuz typically carries about 20 per cent of global oil supply.

Iranian state media said on Sunday that Tehran would permit safe passage through the strait for all vessels except those linked to what it described as “Iran’s enemies.”

The Executive Director of the International Energy Agency, Fatih Birolwarned on Monday that the Middle East situation is “very severe,” exceeding the combined impact of the 1970s oil shocks and the Russia-Ukraine war on gas markets.

On March 11, member nations of the International Energy Agency agreed to release a record 400 million barrels of oil from strategic stockpiles to ease supply disruptions caused by the Iran war.