Crude oil prices pared back earlier gains on Tuesday after US President Donald Trump announced he would not proceed with a proposed toll on vessels transiting the Strait of Hormuz.
The reversal of the policy idea removed a significant source of uncertainty for global energy markets, which had been pricing in the risk of higher shipping costs and potential supply bottlenecks.
The proposed 20% tax had been floated as a mechanism to address regional security concerns, but it faced criticism for potentially disrupting global energy supplies and inflating prices.
Brent crude and WTI futures softened from their intraday peaks as traders digested the news.
The market had been volatile in recent sessions, weighing the threat of the levy against broader geopolitical tensions in the region.
The decision to scrap the toll alleviated immediate concerns about a direct cost increase on oil shipments, which account for a substantial portion of global seaborne trade.
The proposed 20% tax had been floated as a mechanism to address regional security concerns, but it faced criticism for potentially disrupting global energy supplies and inflating prices.