Crude oil benchmarks are tracking for a third consecutive monthly decline, shedding the geopolitical premium that had propped up prices earlier in the year.
The sell-off reflects growing market confidence that the immediate threat to global supply chains is receding, with shipping traffic through key chokepoints stabilizing.
Brent crude and WTI are hovering near four-month lows, erasing gains driven by fears of a broader conflict in the Middle East.
The price action signals that traders are no longer pricing in a severe supply disruption, despite earlier warnings from the International Energy Agency (IEA) that a war involving Iran could trigger a shock surpassing those of the 1970s.
The retreat comes as reports confirm that a growing number of stranded oil tankers are being released or rerouted, alleviating bottlenecks in the Strait of Hormuz.
This operational normalization has reduced the risk premium embedded in energy prices, allowing fundamental demand concerns to reassert themselves.