Brent crude futures fell $2.61, or 3.47%, to $72.65 a barrel, putting the benchmark on track for significant weekly losses.
The sharp decline reflects a rapid unwind of the supply risk premium that had built into energy prices amid fears of disruption in the Strait of Hormuz.
The sell-off is driven by reports that a growing number of stranded oil tankers are now exiting the Strait of Hormuz.
This movement signals that the immediate threat to global supply chains is receding, allowing markets to price in a return to normal shipping flows.
The retreat in prices comes as traders digest the evidence that the chokepoint is reopening to commercial traffic.
Crude oil benchmarks have extended their decline, with prices hovering near four-month lows established in the previous session.