Brent crude, the international benchmark for oil, is now down 5.3% to $91.68 a barrel, after it hit $100 last week. Trum is believed to be considering diplomatic and military options in the conflict with Iran, while the Israeli leader Benjamin Netanyahu is expected to visit the White House on Tuesday. Iran said on Sunday that it would pause “retaliatory” attacks against US allies in the region.

Jim Reid, of Deutsche Bank, says that while the pause is not a formal ceasefire, both sides have presented it as “an opportunity for diplomacy”. US officials, including UN ambassador MikeWaltz, have stressed that all military options remain on the table and that President Trump is simply giving negotiations more space. However, reports from the New York Times and Axios suggest an active debate within the administration over both the effectiveness and costs of further strikes, with some military officials reportedly arguing that key objectives have largely been achieved.

For now, the market is treating the lull as a positive development, although the situation remains highly fluid. The main market risk remains the energy and shipping front. Traffic through Hormuz remains severely disrupted, while the conflict has broadened into the Red Sea, where Iran-backed Houthi forces reportedly launched missile and drone attacks against Saudi energy infrastructure around Jizan and Yanbu over the weekend, prompting retaliatory Saudi strikes.

This raises the prospect of simultaneous disruption to both Gulf and Red Sea export routes. So a welcome pause from the main actors but a fragile one, especially with side battles still ongoing. Elsewhere this morning, AstraZeneca reported better than expected profits for its second quarter, driven by strong growth in its cancer treatment sales.

Its earnings for the three months ended in June rose 18% to $2.63 (£1.97) a share, while its overall revenue rose by 5% to $15.38bn at constant currency. Energy companies BP and Shell are unsurprisingly the worst performers across the FTSE 100 this morning, with their shares down by 3.8% and 2% respectively thanks to the weaker oil price. Overall the energy sector is down by about 2.6%.

JD Sports is the best performer, with shares in the fashion retailer up 3.6%. Vodafone is second, with its shares up 3% after an upbeat quarterly update this morning. European stock market rallies as US-Iran pause pushes oil lower European stocks are rallying this morning as investors rejoice at a sharp drop in oil prices, after the US paused its nearly two-week long run of strikes against Iran.

The Stoxx Europe 600, which tracks the biggest companies on the continent, is up by 0.9%. The UK’s blue chip FTSE 100 is up 0.5%, while the French Cac 40 is up 1.1% and the German Dax is up 1.5%. Oil dips below $90, Eurozone and UK bond yields fall The oil price has dipped below $90 a barrel, as investors weighed the pause in fire between the US and Iran.

Brent crude, the international benchmark, fell by 7.1% to $89.94 a barrel. It rose above $100 last week, when the US carried out several consecutive nights of strikes against Iran, and the Yemeni Houthi movement threatened to carry out a naval blockade of Saudi Arabian ports.