Brent crude fell sharply in early trading as President Donald Trump confirmed the cancellation of planned military strikes against Iran, opting instead to launch fresh negotiations on Monday.
The decision marks a dramatic reversal from the aggressive posture that had driven oil prices higher in recent weeks, effectively removing the immediate risk of a supply disruption in the Strait of Hormuz.
The pivot to diplomacy follows intense pressure from US allies and comes after a period of heightened volatility in energy markets.
Trump, speaking aboard Air Force One, indicated that the talks would focus on nuclear issues and the security of shipping lanes.
This development directly addresses the primary driver of the recent oil price surge, which had been fueled by fears of a prolonged military conflict disrupting global energy flows.
Markets have already begun to price in the de-escalation.