Brent crude fell and the FTSE 100 opened higher on Tuesday as US President Donald Trump signaled a potential de-escalation in tensions with Iran, offering Tehran a "last chance" for peace.
The market reaction marks a sharp reversal from recent sessions, where fears of military intervention and Strait of Hormuz disruptions had driven oil prices to multi-week highs and weighed on global equities.
The shift in tone from Washington appears to have alleviated immediate supply concerns.
Investors are repricing the risk premium embedded in energy markets, with crude sliding as the prospect of a diplomatic resolution gains traction.
The FTSE 100, which had opened in negative territory earlier in the week following Trump's threats to "take over" Iran, reversed course as sentiment improved across risk assets.
This development follows a period of heightened volatility driven by geopolitical uncertainty.