Brent crude futures fell $1.19, or 1.48%, to settle at $79.38 a barrel as traders reacted to the conclusion of the first round of high-level talks between the United States and Iran in Switzerland.
The price decline reflects a rapid unwinding of the risk premium that had built into energy markets amid fears of shipping disruptions in the Strait of Hormuz.
Although the diplomatic sessions ended without a finalized agreement, mediators confirmed that the engagement marked a tangible step toward de-escalation, prompting investors to reduce exposure to geopolitical supply shocks.
This move follows a period of heightened volatility where oil prices had risen sharply due to concerns over tanker routes and potential military friction.
The current pullback suggests that markets are pricing in a lower probability of immediate supply interruptions, even as the broader diplomatic process remains unresolved.
Traders will now focus on whether subsequent rounds of negotiations can yield concrete commitments on nuclear activities and regional security.