Oil Prices Drop as Markets Breathe Sigh of Relief Over US-Iran Diplomacy

Oil prices continued their decline on Tuesday as markets responded positively to a fourth consecutive night without US-Iran military strikes. The absence of immediate concerns about disruptions to Middle East energy supplies led to a sharp correction in oil prices.

Brent crude fell 1.77 percent to $86.80 a barrel, while US West Texas Intermediate dropped 1.97 percent to $80.98 a barrel.

Traders scaled back the geopolitical risk premium that had built up during the recent conflict, reflecting growing confidence that an immediate escalation has been averted.

However, analysts noted that geopolitical risks remain significant and warned that any breakdown in diplomatic efforts or renewed military strikes could quickly reverse the decline and send crude prices sharply higher once again.