Brent crude futures declined in Thursday trading as markets absorbed the implications of a preliminary peace agreement between the United States and Iran.
The diplomatic development has significantly lowered the probability of a military escalation that could disrupt global energy supplies, prompting a rapid repricing of geopolitical risk premiums in the oil complex.
The sell-off in crude was driven by renewed confidence in the security of the Strait of Hormuz, the world's most critical oil transit chokepoint.
Positive signals regarding navigation safety in the strait have alleviated immediate concerns about supply bottlenecks, allowing traders to unwind positions hedged against potential war-related disruptions.
The move reflects a broader shift in sentiment as the threat of renewed hostilities between Washington and Tehran recedes.
This development follows a period of heightened volatility in energy markets, where crude prices had previously retreated as investors digested earlier diplomatic progress.