Brent crude fell $1.68, or 2.09%, to $78.89 a barrel by 0633 GMT on Monday as markets reacted to the conclusion of US-Iran talks in Switzerland.
The decline followed Tehran's announcement that it had secured waivers for its oil and petrochemical exports, a development that significantly reduced immediate fears of a supply disruption from the region.
The price drop marks a sharp reversal from earlier in the week, when Brent had risen on concerns that Iran might re-close the Strait of Hormuz, casting doubt on an interim peace deal.
Traders are now digesting the diplomatic engagement as a tangible step toward de-escalation, with the waiver agreement providing a clearer path for Iranian exports to continue flowing despite ongoing geopolitical tensions.
Multiple wire services, including Reuters and the Jerusalem Post, reported on the conclusion of the first round of talks, noting that the diplomatic progress has alleviated the risk premium that had built into energy markets.
The market's reaction underscores how sensitive crude prices remain to geopolitical developments in the Middle East, with even tentative diplomatic breakthroughs capable of triggering significant repricing.