Brent crude futures fell more than 1% in early trading, extending a multi-day decline as investors digested emerging signs of diplomatic progress between the United States and Iran.
The sell-off reflects a rapid repricing of geopolitical risk premiums that have weighed on energy markets amid ongoing tensions in the Strait of Hormuz.
The price drop follows reports that negotiations are making headway in restoring normal shipping traffic through the strait, a vital artery for global oil supplies.
Market participants appear to be scaling back hedges against supply disruption, with the benchmark sliding further from recent highs.
The move underscores how sensitive energy prices remain to developments in the region, where even tentative diplomatic signals can trigger significant volatility.
This development marks a shift from the previous session, where uncertainty over tanker movements and potential blockades kept a lid on buying interest.