Crude oil prices collapsed sharply on Tuesday, with Brent and WTI shedding approximately 11% as the market rapidly unwound the geopolitical risk premium that had built up over the previous week.
The steep decline followed several nights without American airstrikes on Iran or retaliatory measures from Tehran, signaling a de-escalation in tensions that had previously driven energy markets higher.
The sell-off erased a week of gains in a matter of hours, reflecting how quickly traders are repricing the threat of supply disruption.
The market had previously sustained a risk premium following the collapse of a ceasefire between the United States and Iran, but the absence of new military action has led to a swift reversal in sentiment.
Energy traders are now focusing on the diplomatic track rather than military escalation.
This move follows a broader pattern of volatility in the oil complex.