Crude oil prices retreated sharply on Monday, driven by growing optimism that the United States and Iran are nearing an interim peace agreement.
The diplomatic de-escalation has significantly reduced the premium for geopolitical supply risk that had been weighing on energy markets, providing immediate relief to traders worried about persistent inflationary pressure from high energy costs.
52%, while the S&P 500 and Nasdaq Composite also posted gains as investors rotated into risk assets.
The drop in oil prices acted as a catalyst for a broad rally across US equity markets.
The Dow Jones Industrial Average rose 0.52%, while the S&P 500 and Nasdaq Composite also posted gains as investors rotated into risk assets.
The move reflects a repricing of the inflation outlook, with lower energy costs reducing the likelihood of further aggressive monetary tightening by the Federal Reserve.
This development marks a shift in sentiment from recent weeks, where tensions in the Middle East had kept oil prices elevated and weighed on global growth expectations.