Oil prices tumbled on hopes of easing tensions between the US and Iran, with Brent crude falling more than 9% to below US$88 a barrel after reports that military attacks had paused to allow negotiations.
The decline reversed last week's surge above US$100 a barrel, which was driven by fears over disruptions to global energy supplies following renewed conflict in the Middle East and threats to key shipping routes, including the Strait of Hormuz and the Red Sea.
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Analysts say markets remain cautious despite the drop, as uncertainty persists over whether talks will lead to a lasting peace agreement.
The conflict has pushed up fuel costs globally, adding inflationary pressures and complicating interest rate decisions for central banks. While investors had expected interest rate cuts in some major economies this year, rising energy prices have increased the likelihood that rates could remain higher for longer.
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