Oil prices retreated below the $80-a-barrel threshold on Thursday as investors digested a landmark interim peace agreement between the United States and Iran, a development that significantly reduces the risk of a broader Middle East war.
The diplomatic breakthrough, confirmed by the signing of the deal by both nations' leaders, has immediately altered the risk premium embedded in global energy markets.
The market reaction was swift and decisive.
Brent crude and other benchmark energy contracts dipped in early trading, shedding the geopolitical risk premium that had accumulated over recent weeks.
Asian stock markets remained steady as traders weighed the implications of the deal, which promises to stabilize one of the world's most volatile geopolitical flashpoints.
The easing of tensions directly impacts the outlook for energy flows through the Strait of Hormuz, a critical chokepoint for global oil supplies.