Brent crude futures fell sharply at the start of the trading week, shedding the risk premium that had built up over months of escalating tensions in the Middle East.
The sell-off followed confirmation that the United States has paused its military attacks on Iran, a development that immediately alleviated investor fears of a prolonged supply disruption from the region.
The price action reflects a rapid repricing of geopolitical risk.
With the immediate threat of direct US-Iranian conflict receding, traders are unwinding positions that had bid up energy prices in anticipation of potential Strait of Hormuz closures or broader regional instability.
The move underscores how heavily the market had priced in the worst-case scenario for global oil flows.
Despite the de-escalation between Washington and Tehran, supply risks have not vanished entirely.