Crude oil prices fell sharply and European stock markets rallied on Monday after Donald Trump cancelled planned strikes on Iran to focus on negotiations for a peace deal.Brent crude was trading 5% lower at $83.50 a barrel by mid-morning, after falling as low as $81.55 a barrel. US West Texas Intermediate dropped more than $5 to $79.47 a barrel.Both global oil benchmarks jumped more than 20% in July after fighting between the US and Iran resumed, and as attacks on several tankers in the strait of Hormuz revived fears for the safety of vessels transiting the important shipping passage.Trump said late on Saturday on his Truth Social platform that Iran and other Middle Eastern countries had asked for time to complete a deal that would lead to “the Immediate, Complete and Total” reopening of the Strait and “an end to Iran’s nuclear threat”. On Sunday, he said talks with Tehran would start on Monday.Kathleen Brooks, the research director of the broker XTB, said the drop in oil prices should help support markets. “This will ease inflation fears and could also act as a dampener on bond yields, which rose sharply last week, especially at the long end, where 30-year US Treasury yields jumped to their highest level for 19 years,” she added.In a positive start to August, European shares edged higher. The pan-European Stoxx 600 index rose 0.4%. Energy stocks declined 2%, while travel and leisure shares gained 2.1%.Tony Sycamore, a market analyst at the investment platform IG, said: “The bigger focus is whether this week turns into a rinse and repeat of last week – with hopes of a deal collapsing as Iran digs in its heels and continues to leverage its control over the strait, potentially through an attack on a US base or a tanker transiting the waterway.”Two tankers laden with Saudi oil crossed the Bab el-Mandeb Strait out of the Red Sea over the weekend, while traffic in the strait of Hormuz slowed after reports of vessel attacks, according to shipping data.