Brent crude futures fell sharply on Monday, dropping $4.89, or 5.05%, to settle at $91.89 a barrel.
The benchmark briefly breached the psychologically important $90 support level during the session as traders reacted to the sudden de-escalation in the Middle East.
The steep decline followed reports that the United States and Iran have suspended military strikes, halting two weeks of active hostilities.
The pause has reignited hopes for a diplomatic resolution to the conflict, which had previously driven energy markets higher on fears of sustained supply disruption.
Markets are rapidly repricing the geopolitical risk premium that had built into oil prices over the past fortnight.
The swift sell-off suggests that investors view the current truce as a credible step toward stability, reducing the immediate threat to global supply chains and shipping routes in the region.