Oil Plummets 6% After Trump Pauses Attack on Iran

WHAT HAPPENED

U.S. oil WTI fell 6.21%, to $79.41 per barrel, and Brent fell 5.11%, to $83.24. The market reacted to a U.S. military pause against Iran and increased production from OPEC+.

WHY IT MATTERS

Less risk of war reduces fears of a closure of the Strait of Hormuz, through which one-fifth of the world's oil passes. Additionally, there will be more supply. This puts downward pressure on gasoline, transport, plastics, and inflation, although not immediately.

AND FOR YOUR PORTFOLIO

For a long-term portfolio, cheaper oil may benefit transportation and consumer companies, but it pressures oil companies because each barrel sold generates less revenue. It also reduces a source of inflation that affects the markets.