Oil prices experienced a sharp 4% decline on Monday as market anxieties over supply chain disruptions began to wane. The downward trend followed positive reports regarding diplomatic progress between the U.S. and Iran, specifically concerning the stability of the Strait of Hormuz. After an initial surge in trading sparked by concerns over potential conflict, Brent crude dropped to $77.39 per barrel, while West Texas Intermediate also saw significant losses as traders reacted to the news that Iranian oil exports have been granted temporary authorization through August.

The market’s cooling also reflects a broader influx of oil returning to global channels, with ship tracking data confirming that tankers are successfully traversing the Strait of Hormuz once again. Further easing supply constraints, nations such as Kuwait, Iraq, and the UAE have stepped up to provide additional barrels, while Iraq aims to incrementally restore its production levels. Although analysts at ANZ suggest that a full restoration of supply remains a complex, long-term challenge dependent on both logistical improvements and upstream refinery recovery, the immediate relief provided by the resumed flows has successfully tempered the volatility that dominated the market earlier in the day.