Brent crude fell to its lowest level in three weeks on Tuesday, driven by growing optimism that the United States and Iran are close to finalizing a deal to reopen the Strait of Hormuz to commercial shipping.
The price decline reflects a rapid unwinding of the risk premium that has supported energy markets amid months of geopolitical tension in the critical waterway.
US Treasury officials indicated that an agreement could be reached "today or tomorrow," signaling a potential near-term resolution to the transit restrictions that have disrupted global energy flows.
The prospect of restored access to the chokepoint, through which a significant share of global oil exports pass, has prompted traders to reduce hedges against supply disruption.
The market reaction underscores the sensitivity of energy prices to geopolitical developments in the Persian Gulf.
Earlier in the week, Wall Street equities rallied on similar signals from US officials, including comments from Treasury Secretary Scott Bessent regarding the imminent deal.