Oil prices retreated as markets digested a preliminary peace agreement between the United States and Iran, a diplomatic breakthrough that significantly reduces the risk of supply disruptions in the Strait of Hormuz.
The development marks a sharp pivot from months of tense negotiations and military posturing, shifting the market focus from geopolitical premium to fundamental supply and demand dynamics.
Brent crude has traded below $100 a barrel for a fortnight, reflecting the market's growing confidence that the imminent end to hostilities will keep global shipping lanes open.
Brent crude has traded below $100 a barrel for a fortnight, reflecting the market's growing confidence that the imminent end to hostilities will keep global shipping lanes open.
The easing of trade-route risk has already begun to filter through to consumer markets, with average pump prices for petrol falling by 3 pence per litre in the UK as wholesale energy costs soften.
The framework deal, first reported by Axios and corroborated by WirtschaftsWoche, serves as a foundational step toward a formal peace treaty.
By removing the immediate threat of a broader regional conflict, the agreement has allowed energy traders to unwind the war premium that had buoyed prices throughout the spring.