Crude oil prices declined by approximately 3% on Thursday, wiping out a week of gains that had been fueled by escalating tensions in the Middle East.
The sell-off followed reports that former US President Donald Trump has signaled hesitancy to resume full-scale military action against Iran, despite ongoing hostilities in the region.
Brent crude and WTI benchmarks both retreated, with traders rapidly repricing the risk premium that had built into energy markets over the previous five trading days.
The move reflects a shift in market sentiment from acute supply disruption fears to a more normalized risk assessment, as investors digest the political signals from Washington.
Analysts note that the market has become accustomed to the persistent tension and periodic disruptions in the Strait of Hormuz, but the prospect of a broader conflict had kept a lid on prices.
With the immediate threat of expanded military engagement receding, the urgency to hedge against severe supply shocks has diminished.