Oil prices reversed early gains on Monday as global equity markets rallied following reports that the United States and Iran have agreed to a ceasefire.
The deal includes a commitment to maintain the flow of commercial shipping through the Strait of Hormuz, directly addressing the supply disruption risks that had weighed heavily on energy markets in recent sessions.
Brent crude and WTI benchmarks retreated from their elevated levels as the immediate threat to one of the world’s most critical energy chokepoints receded.
The market reaction underscores how much of the recent price strength was driven by geopolitical risk rather than fundamental supply deficits.
With the Strait of Hormuz accounting for a significant share of global oil exports, the assurance of uninterrupted transit has allowed traders to unwind speculative long positions.
The development marks a sharp pivot from the previous week, when escalating tensions between Washington and Tehran had pushed oil prices higher and dragged down equity indices across Asia and Wall Street.