Oil Falls, Asian Markets Mixed Over Fresh U.S.-Iran Talks — Update

By Ronnie Harui and Kimberley Kao

Oil prices dropped in early afternoon Asian trading Monday, after President Trump said new U.S.-Iran talks would begin, easing concerns regarding supply disruptions in the Middle East.

Trump told reporters Sunday that the U.S. would engage in talks with Iran starting Monday afternoon. Trump said that he had been prepared to launch the biggest military attack since World War II but had been talked down by U.S. allies.

There were initial signs of a diplomatic opening Sunday. Iranian Foreign Minister Abbas Araghchi said discussions with Oman about a mechanism for ships to transit the Strait of Hormuz was "nearing completion and in their final stages," according to Iranian state media. The strait is a critical waterway through which one-fifth of the world's oil is transported.

The "dominant story" for Asia is the sharp decline in Brent oil prices, Commerzbank Research analysts said in a note.

"While the latest shift towards diplomacy has reduced the immediate risk premium, Iran has continued to warn that any fresh U.S. military action could trigger attacks on regional energy infrastructure, keeping geopolitical risks firmly on the radar," said Priyanka Sachdeva, head of market insights at Phillip Nova.

"A more meaningful decline in crude prices would likely require confirmation of a durable ceasefire, sustained progress in negotiations, and the normalization of tanker traffic through the Strait of Hormuz," Sachdeva added.

Front-month West Texas Intermediate crude oil futures dropped 6.0%, falling below $80 a barrel, while front-month Brent crude oil futures were 5.3% lower at $83.25 a barrel, according to ICE data.

Futures tied to the Dow and S&P 500 were each trading 0.6% higher, while Nasdaq futures were 0.8% higher.

The yen strengthened markedly against other Group of 10 and Asian currencies Monday, driven by the possibility of further intervention by monetary authorities in the foreign-exchange market following the first joint U.S.-Japan intervention in the yen in 15 years.

The dollar was recently 0.8% lower at 156.39 yen after earlier touching 155.21 yen, the lowest intraday level since May 6, according to LSEG data.

Japan's Ministry of Finance intervened in the foreign-exchange market to buy the yen on Friday U.S. time, in coordination with the U.S. Treasury Department, Finance Minister Satsuki Katayama said Monday.

Katayama also said that the ministry is maintaining close communication with the U.S. Treasury Department and that the ministry won't hesitate to intervene again together with its U.S. counterpart.

"Expectations are that authorities will intervene again if the yen starts to unwind recent moves," said Skye Masters, head of markets research at National Australia Bank, in commentary.

Equity markets across Asia-Pacific were mixed. Japan's Nikkei Stock Average fell 1.0%, while Hong Kong's Hang Seng Index was 0.1% higher and Taiwan's Taiex added 0.7%.

South Korea's Kospi dropped 5.4%. Korea Exchange briefly suspended trading on tech-heavy Kosdaq index after it jumped more than 6%.

Korean equities are at the center of the "highly contested debate over the future direction of the AI-fuelled tech super-cycle," with sizable participation from retail investors, said William Bratton, head of cash equity research for Asia Pacific at BNP Paribas. This confluence of factors are contributing to the extreme volatility, Bratton said.

Write to Ronnie Harui at ronnie.harui@wsj.com

(END) Dow Jones Newswires

August 03, 2026 01:54 ET (05:54 GMT)