Brent crude futures fell 37 cents, or 0.5%, to $79.08 a barrel, while US West Texas Intermediate (WTI) crude dropped 53 cents, or 0.7%, to $74.69 a barrel.
The decline reflects growing investor confidence that ongoing negotiations between Iran and Oman could facilitate a broader peace agreement between the United States and Iran, potentially concluding the five-month conflict that has weighed on global energy markets.
The price pullback marks a continuation of the relief rally that began earlier in the week.
Global oil prices had already retreated on Monday following reports of progress in US-Iranian peace talks, with traders pricing in a reduced risk of supply disruptions.
The latest diplomatic developments in Oman have reinforced those expectations, prompting further selling pressure on energy benchmarks.
The potential resolution of the conflict would remove a significant premium from oil prices that has persisted due to fears of shipping disruptions in the Strait of Hormuz.