Brent crude futures for September delivery have dropped sharply on the London International Futures Exchange, falling more than 9% to trade at $87.90 a barrel.
The decline marks the first time the benchmark has slipped below the $88 threshold since July 21, signaling a rapid repricing of supply risk in the global oil market.
Earlier this week, Brent crude had already fallen to around $77.
The steep sell-off follows a significant shift in geopolitical policy that has alleviated fears of a supply crunch.
The United States recently suspended sanctions on Iranian oil exports through August 21, a move that formalized a temporary general license issued by the US Treasury.
This policy adjustment has allowed Iranian crude to re-enter global markets, adding substantial supply to a market that had been pricing in tightness.
Earlier this week, Brent crude had already fallen to around $77.80 a barrel on Monday as the sanctions suspension took effect.