Oil prices tumbled after Donald Trump called off fresh US strikes on Iran, saying that peace talks would resume.

Prices of the international benchmark Brent crude fell nearly 7 per cent yesterday and were trading at around $84.14 a barrel, after falling as low as $81.55 earlier in the day.

It marked a sharp reversal from a previous surge in oil prices back above $100 a barrel last month, when fighting broke out between the two sides and attacks on oil tankers in the Strait of Hormuz revived fears that there would be a fresh fuel supply crunch.

Trump said on social media over the weekend that a looming US strike, which he described as the ‘biggest attack since World War II,’ had been called off in the hopes that a peace deal could be reached ‘rapidly’ with Tehran, which would include agreements over the future of the country’s nuclear programme and the full reopening of the strait.

A fall in global energy prices is expected to ease upward pressure on inflation, reducing the need for further rises in interest rates from the world’s central banks and providing relief for mortgage borrowers. 

It will also spare households and drivers from fresh increases in energy bills and costs at the petrol pumps.