Brent crude is on track to shed approximately 20% as renewed optimism surrounding US-Iran peace negotiations drains the geopolitical risk premium from energy markets.
The sharp repricing reflects a rapid shift in investor sentiment, with traders unwinding positions built on the expectation of prolonged Strait of Hormuz disruptions.
European equities are poised to open higher on Tuesday, with futures indicating broad-based gains across major benchmarks.
The FTSE 100, Germany’s Dax, and the Stoxx 600 are all pointing to positive starts, as the prospect of stabilized Middle East relations reduces uncertainty for global growth and corporate earnings.
The move underscores the sensitivity of energy prices to diplomatic developments.
With the threat of supply disruptions receding, the immediate focus for traders shifts from tail-risk hedging to fundamental supply-demand dynamics.