Brent crude and WTI futures declined in early Thursday trading as the United States confirmed it had halted its latest wave of military strikes on Iran.
The announcement marked a significant de-escalation in a conflict that had intensified over the weekend, with Iranian forces responding to US attacks with counter-strikes on American bases in the Persian Gulf.
The pullback in oil prices reflects a rapid unwinding of the supply risk premium that had supported the market.
Earlier this week, crude prices had rallied for a fourth consecutive day as investors priced in the potential for sustained disruption to Iranian oil exports and regional shipping routes.
The decision by Washington to end the offensive, coupled with reports that the US and Iran have agreed to a mutual cessation of hostilities, has alleviated immediate fears of a prolonged supply shock.
This development follows a broader shift in the geopolitical landscape surrounding Iran.