CRUDE oil prices fell more than four per cent towards US$80 a barrel on Monday, reversing part of last month's rally as investors shifted their focus from geopolitical tensions to renewed diplomacy between the United States and Iran.
The sell-off followed an announcement by United States President Donald Trump that peace negotiations with Iran would resume on Monday after he cancelled plans for a major military strike against the Islamic Republic.
Trump said several key Middle Eastern allies, including Saudi Arabia, had urged Washington to suspend military action and prioritise negotiations, while also calling for the swift reopening of the Strait of Hormuz, a strategic maritime route for global energy supplies.
Crude prices had climbed approximately 23 per cent in July after renewed hostilities between the United States and Iran derailed an interim peace agreement, fuelling fears of supply disruptions from the Strait of Hormuz to the Red Sea.
Market sentiment was further weighed down after leading OPEC+ producers approved another modest increase in production quotas, completing the restoration of output cuts introduced in 2023 and signalling scope for further supply increases once regional tensions ease.
Meanwhile, currency markets were dominated by renewed strength in the Japanese yen after coordinated intervention by Japan and the United States to counter excessive volatility.
The US Dollar Index (DXY) slipped to 99.4474 on Aug 3, down 0.47 per cent from the previous session. The dollar has weakened 1.39 per cent over the past month, although it remains 0.67 per cent higher than a year earlier.
The greenback fell 0.6 per cent against the yen to an intraday low of 156.50 during Asian trading after Tokyo confirmed it had conducted joint yen-buying intervention with Washington on Friday.
The USD/JPY exchange rate later declined to around 155.45, its lowest level since May 6, as investors increased purchases of the Japanese currency following reports of further coordinated support.
Bloomberg reported that Japanese Finance Minister Satsuki Katayama and United States Treasury Secretary Scott Bessent are cooperating to support the yen at a level not seen in decades.
Katayama said Japanese authorities had carried out coordinated yen-buying intervention with the United States on Friday and stressed that Tokyo would not hesitate to undertake further foreign exchange operations with Washington if required.
Bessent said the coordinated intervention had helped curb disorderly movements in the yen, adding that the US Treasury would remain vigilant and continue close coordination with Japan's Ministry of Finance and the Bank of Japan.
Japan's top foreign exchange official, Atsushi Mimura, said the latest intervention could represent the strongest level of US-Japan cooperation on currency stabilisation in decades. - August 3, 2026
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