Crude oil prices fell more than 5% in early Asian trading, marking a sharp reversal from the recent surge driven by Middle East tensions.
The sell-off reflects growing investor optimism that hostilities between the United States and Iran may be de-escalating, reducing fears of a sudden supply disruption.
Brent crude and West Texas Intermediate (WTI) both retreated significantly, erasing gains accumulated during the period of heightened geopolitical risk.
The move suggests that the market is rapidly repricing the probability of a conflict-related supply shock downward as diplomatic channels appear to be opening.
This development follows a period where oil prices had climbed back to levels not seen since before the US and Iran signed a ceasefire agreement in mid-June.
Escalating hostilities had previously reignited concerns about tightening global supply, pushing benchmarks toward multi-month highs.