Crude oil prices pulled back from recent peaks on Monday after US President Donald Trump announced he would not proceed with a proposed 20% tax on goods transiting the Strait of Hormuz.
The levy had been floated as a mechanism to recoup costs associated with securing the vital waterway, but its abandonment signals a de-escalation in the immediate threat to global shipping lanes.
Brent crude and WTI benchmarks softened in the session as traders unwound positions built on the expectation of higher transit costs and potential supply disruptions.
The move marks a sharp reversal from the previous week's volatility, where fears of Iranian retaliation and shipping restrictions had driven energy prices higher.
With the tax threat removed, the immediate geopolitical premium embedded in oil prices appears to be evaporating.
This development follows a period of intense scrutiny on the Strait of Hormuz, which handles roughly a fifth of global oil consumption.