Brent crude futures dropped below the $80 per barrel threshold on Monday, marking a significant reversal from recent supply-risk premiums.
The sell-off was driven by reports that high-level negotiations between the United States and Iran in Switzerland have yielded tangible progress toward an interim peace agreement.
Iran’s foreign minister characterized the opening day of talks as productive, despite initial tensions.
This diplomatic signal has rapidly altered market sentiment, with traders pricing in a lower probability of immediate supply disruptions in the Persian Gulf.
The prospect of a stabilized Strait of Hormuz has removed a key risk premium that had supported oil prices in recent weeks.
The broader market reaction was swift and positive.