Brent crude futures fell more than 1% on Wednesday, extending a multi-day sell-off to reach fresh four-month lows.
The decline reflects growing market confidence that shipping traffic through the Strait of Hormuz is stabilizing, reducing the immediate risk of supply disruption in one of the world's most critical energy chokepoints.
The price action underscores a rapid repricing of geopolitical risk.
As reports indicate that more oil tankers are moving out of the Strait without incident, the premium investors had been paying for potential transit blockades is evaporating.
This shift suggests that markets are increasingly pricing in a de-escalation of tensions rather than a prolonged standoff.
The development follows recent statements indicating that Iran will not charge tolls in the Strait, a move that has further bolstered trader sentiment.