Global oil prices extended their decline for a second consecutive trading session on Tuesday, falling by nearly 7 percent as renewed diplomatic engagement between the United States and Iran continued to ease fears of an immediate disruption to crude supplies from the Middle East.
As of 5:50 p.m. WAT, Brent crude traded at $82.80 per barrel, down 6.29 percent, while West Texas Intermediate (WTI) fell 5.58 percent to $78.00 per barrel, erasing more of last week's sharp rally that briefly pushed Brent above the $100-per-barrel mark.
The latest losses came as investors responded positively to signs that Washington and Tehran could be moving closer to renewed negotiations after weeks of military confrontation that rattled global energy markets.
U.S. President Donald Trump said there was a "good chance" of reaching an agreement with Iran, although he cautioned that military action could resume if diplomatic efforts failed.
"They want to meet, and we are meeting. We'll see what happens. There is a chance we can make a deal," Trump told reporters.
"We're talking with Iran right now. We are having good talks. So, we'll see what happens. There is a good chance something can happen," he added.
The market reaction marked a sharp reversal from last week, when fears that the conflict could disrupt crude exports through the Strait of Hormuz and the Bab el-Mandeb Strait drove Brent crude above $100 per barrel for the first time in nearly two months.
Despite the decline in prices, concerns over maritime security in the Middle East continue to underpin the market.
Traffic through both the Strait of Hormuz and the Bab el-Mandeb Strait remains significantly below normal levels as shipping companies continue to reassess operational risks across the region.
According to S&P Global's CAS Gulf Hormuz Update, vessel movements through the Bab el-Mandeb Strait have fallen sharply in recent days, with some operators avoiding Saudi Red Sea ports altogether while others continue rerouting vessels around the Cape of Good Hope to minimise security risks.
The report noted that shipping activity through the Strait of Hormuz also remains well below historical levels despite the recent pause in hostilities, indicating that confidence has yet to fully return to one of the world's most critical oil transit routes.
Meanwhile, Iran intensified its diplomatic outreach aimed at restoring stability in the Gulf.
Iranian Foreign Minister Abbas Araghchi held separate telephone discussions with Omani Foreign Minister Badr Albusaidi and Saudi Foreign Minister Prince Faisal bin Farhan, calling for stronger regional cooperation to stabilise the Strait of Hormuz.
According to Iran's state broadcaster, IRIB, Araghchi blamed what he described as "U.S. aggression" for the current instability and urged neighbouring countries to strengthen diplomatic coordination to restore security along the strategic waterway.
While the renewed diplomatic efforts have significantly reduced the geopolitical risk premium that drove last week's rally, analysts note that shipping disruptions, reduced vessel traffic and lingering security threats across the region continue to pose risks to global crude supplies should negotiations break down.