Oil prices fell sharply and U.S. stock futures rallied as the U.S. and Iran paused attacks, reviving hopes for diplomatic progress and a reopening of the Strait of Hormuz. Brent crude for September delivery fell close to $90 a barrel, with Omani diplomats working with Iranian officials to restart shipping through the strait, though Red Sea tensions maintain a risk premium.

Brent crude contracts for September fell 5.8% to $91.16 a barrel, while WTI dropped 5.4% to $84.45. October Brent slid 5.2% to $86.95. ANZ analysts note the oil market remains reliant on shrinking buffers despite the pause, citing falling inventories and pressure on Saudi Arabia's East-West pipeline.

U.S. futures surged, with S&P 500 and Dow Jones Industrial Average rising 0.85% and Nasdaq futures jumping 1.4%. Tech stocks led gains as markets look past AI jitters and Middle East conflict. The Federal Reserve announces policy Wednesday ahead of U.K. and Japan central bank meetings, with U.S. growth and inflation data Thursday shaping rate outlook.