Brent crude futures dropped approximately 4.5% to just above $83 a barrel on Monday, reversing recent gains driven by geopolitical risk premiums.
The sell-off followed reports that Iran’s foreign minister, Abbas Araghchi, stated discussions between Tehran and Oman regarding the management of the Strait of Hormuz are in their final stages.
The market reaction underscores the sensitivity of energy flows to diplomatic developments in the region.
Investors had previously priced in significant disruption risk after President Donald Trump announced preparations for major military strikes against Iran.
However, Trump subsequently called off the operation, opting instead to pursue fresh negotiations.
This pivot from kinetic action to diplomacy provided immediate relief to shipping risk assessments.