Brent crude futures fell in early Tuesday trading as reports emerged that mediators have tabled a 10-day ceasefire proposal between the United States and Iran.
The development marks a potential pivot in the West Asia conflict, offering a tangible path to de-escalate tensions that have weighed heavily on energy markets for weeks.
The price action reflects a rapid shift in sentiment as investors digest the possibility of a diplomatic resolution.
With the threat of immediate supply disruption receding, the risk premium embedded in oil prices is unwinding.
This follows a period of heightened volatility where crude prices swung on the back of military strikes and counter-strikes, with markets previously pricing in significant supply constraints from the Strait of Hormuz.
The proposed truce comes after a series of escalations that saw US strikes on Iranian targets reignite fears of a broader regional conflict.