Global crude oil benchmarks have fallen to their lowest levels in four months, driven by a sharp reduction in geopolitical risk premiums.
The sell-off reflects growing market confidence that diplomatic talks between the United States and Iran are progressing, thereby alleviating fears of supply disruptions in key shipping routes.
Brent crude and West Texas Intermediate (WTI) both extended their declines, sliding more than 1% from recent session highs.
Brent crude and West Texas Intermediate (WTI) both extended their declines, sliding more than 1% from recent session highs.
The move marks a significant reversal from the previous week's volatility, where prices were buoyed by concerns over potential sanctions or military escalation in the Strait of Hormuz.
Traders are now pricing in a lower probability of immediate supply shocks, leading to a broad-based unwind of risk positions in energy markets.
The decline follows comments from diplomatic sources suggesting that negotiations are moving toward a constructive phase.