Brent crude has fallen by approximately 20% over the past several weeks, returning to levels seen before the recent escalation in the Strait of Hormuz.
The sharp correction reflects a broad market relief rally as traders digest the emergence of a fragile ceasefire in the region, which has temporarily reduced the premium for shipping disruption risks.
The price action underscores how quickly sentiment can shift when geopolitical tensions ease, even if the underlying peace remains precarious.
Investors appear to be recalibrating their risk models, moving away from worst-case supply shock scenarios that had driven prices higher in previous sessions.
This development follows a period of volatility triggered by diplomatic statements, including reports that China agreed to purchase American crude oil following talks between U.S. President Donald Trump and Chinese leader Xi Jinping.
Those announcements had previously supported oil prices, but the current pullback suggests that immediate physical supply concerns are taking precedence over trade-flow narratives.