Crude oil prices fell sharply on Monday as markets reacted to reports of a pause in tit-for-tat strikes between the United States and Iran.
The de-escalation has reignited hopes for a return to a ceasefire and renewed negotiations regarding the reopening of the Strait of Hormuz, a vital global energy chokepoint that has been under threat of disruption.
Brent crude and WTI benchmarks retreated from recent highs as traders unwound the risk premium that had built up amid fears of supply interruptions.
The price action reflects a rapid repricing of shipping risk, with investors betting that the immediate threat to tanker routes through the narrow waterway has diminished.
The move underscores how sensitive energy markets remain to geopolitical developments in the Persian Gulf, where even tentative diplomatic progress can trigger significant volatility.
The development follows a period of intense tension that had kept shipping insurers and energy traders on high alert.