US oil prices have fallen back to levels seen before the recent geopolitical escalation, as physical flow through the Strait of Hormuz shows clear signs of improvement.
The normalization of shipping activity in the critical waterway is stripping away the supply disruption risk that had kept a premium on crude benchmarks in recent weeks.
The price correction follows the market's digestion of a preliminary peace agreement between the United States and Iran.
That diplomatic breakthrough significantly lowered the probability of supply interruptions in the Strait, which handles a substantial portion of global oil trade.
With the immediate threat of blockade or attack receding, traders are unwinding positions that had priced in severe logistical constraints.
Brent crude and WTI have both retreated from their conflict-driven highs, reflecting the shift in sentiment from scarcity to stability.