Global oil prices retreated sharply on Monday as traders priced in a potential de-escalation of geopolitical risks following reports of progress in peace negotiations between the United States and Iran.
The development has sparked broad relief across energy markets, with Brent crude sliding as investors reassess the likelihood of supply disruptions in the Strait of Hormuz.
The sell-off in crude comes amid a broader risk-on sentiment in global equities, where share prices rose on hopes that an interim peace deal could stabilize the region.
Market participants are interpreting the diplomatic breakthrough as a significant reduction in the premium previously embedded in energy prices due to fears of conflict-related supply shocks.
According to reports from La Libre Belgique and Asharq Al-Awsat, officials from both nations have made tangible progress in their discussions, raising expectations for a formal agreement in the near term.
This diplomatic shift has prompted a rapid repricing of risk across commodities, with oil leading the decline as the immediate threat of military escalation appears to have diminished.