Oil prices fell more than 5% on Monday after US President Donald Trump said peace talks with Iran would resume later in the day following his decision to cancel a planned military strike against Tehran.
International benchmark Brent crude dropped to around $83.40 per barrel as of 0605GMT, while US benchmark West Texas Intermediate (WTI) also declined 6% to $79.60.
Prices retreated sharply as prospects of renewed diplomacy eased concerns over further disruptions to energy supplies from the Middle East.
Trump said key US allies in the region, including Saudi Arabia, had urged him to suspend the attacks and prioritize negotiations.
He also reiterated his call for the Strait of Hormuz, one of the world's most important oil transit routes, to be reopened swiftly.
Brent prices surged about 25% in July after renewed hostilities between the US and Iran shattered an interim peace agreement and intensified supply disruptions extending from the Strait of Hormuz to the Red Sea.
The conflict raised concerns over crude and petroleum product shipments through the region, placing upward pressure on oil prices throughout the month.
Meanwhile, major OPEC+ producers approved another modest increase in production quotas, completing the planned restoration of output cuts introduced in 2023.
The group also retained room to raise supplies further once the Middle East conflict ends, adding to downward pressure on prices.
