SynopsisBrent crude futures dropped $4.89, or 5.05%, to $91.89, after briefly falling below the key $90 support level earlier in the session. US West Texas Intermediate crude stood at $84.64 a barrel, down $4.67, or 5.23%. The decline comes after crude prices surged 10% last week.ETMarkets.comOil prices fell over 5% on Monday after the US and Iran paused strikes over the weekend, following two weeks of attacks. The pause has raised hopes that diplomacy could help ease the conflict and eventually allow shipping through the Strait of Hormuz to return to normal.Crude oil price on July 27Brent crude futures dropped $4.89, or 5.05%, to $91.89, after briefly falling below the key $90 support level earlier in the session. US West Texas Intermediate crude stood at $84.64 a barrel, down $4.67, or 5.23%. The decline comes after crude prices surged 10% last week.Both benchmarks are now at their lowest levels in nearly a week, after climbing for the previous three weeks. Brent had earlier touched $100 a barrel as the conflict disrupted oil shipments through the Strait of Hormuz and spread to the Red Sea, affecting exports from Saudi Arabia, the world's top oil exporter, to Asia through the Bab el-Mandeb strait.However, the pause in attacks has not yet brought shipping through the region back to normal. Fewer than 10 commodity vessels crossed the Strait of Hormuz each day over the weekend, according to shipping data from Kpler. Traffic through the Bab el-Mandeb strait also declined on Sunday after Yemen's Houthis attacked Saudi oil installations along the Red Sea coast. A third Chinese supertanker, however, managed to exit through the Bab el-Mandeb strait.Also read:Oil crosses $100: A 'perfect hurricane' can trigger bigger shock soonOver the week, reports emerged suggesting that Pakistan is looking at ways to help restart the stalled U.S.-Iran negotiations aimed at ending their nearly five-month-old war, a Reuters report said, adding that the move follows an initiative from China.Yemen's Iran-backed Houthi movement announced a naval blockade against Saudi Arabia, a close ally of Islamabad that signed a mutual defence treaty with Pakistan last year. Pakistan depends on Saudi financial support and has strongly condemned recent Houthi attacks on Saudi Arabia. Taking a position that is seen as too sympathetic to Iran could therefore strain ties with Riyadh.At the same time, Islamabad is heavily reliant on Beijing, which has also provided significant financial support and has economic interests in a diplomatic resolution that would help reopen important trade routes across the Middle East. What’s next for prices?JPMorgan said in a note that every additional month of disruption to oil supplies could push Brent prices up by around $7 to $8 a barrel. If the disruption continues for three months, the bank expects monthly average Brent prices could climb to around $114 a barrel.Goldman Sachs has warned that Brent crude could reach $120 a barrel if shipping through the Strait of Hormuz, the world's most important oil transit route, remains disrupted. Its base case, however, is that tensions in the Middle East will eventually ease.If the conflict subsides, Goldman Sachs expects Brent to average $80 a barrel in the fourth quarter and $75 next year. The bank said the risks to those forecasts remain "tilted to the upside", citing the possibility of prolonged disruptions to shipping through both the Strait of Hormuz and the Red Sea.Anindya Banerjee, Head of Commodity Research at Kotak Securities, said geopolitical developments were once again driving crude oil prices. "Any strike on major Gulf export infrastructure could force a retest of $95-100 and beyond," he said.Read more:Indian refiners scout new crude sources as Gulf risks riseBanerjee said the market was now looking beyond military strikes and increasingly focused on the weakening prospects of a diplomatic breakthrough. Tehran has imposed new conditions for restarting negotiations, he said, while each new development is pushing back the return of normal tanker traffic through the Strait of Hormuz. Shipping activity through the waterway continues to remain well below pre-war levels.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)Read More News on(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. 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