The war premium is draining out of oil almost as fast as it rushed in. Brent crude fell 8.7% on Tuesday to $81.31 a barrel, and WTI dropped 5.3% to $78.48, extending a slide that began over the weekend when the United States and Iran stopped shooting at each other.
That leaves Brent roughly 20% below the $101.87 peak it touched last Thursday. In barely a week the market has handed back almost the entire spike that came with this month's fighting. The round trip has been violent, with Brent swinging from the mid-$80s to above $101 and back under $82 in a little over two weeks.
A pause, then a scramble to sell
The turn came from the front line, not the trading floor. US and Iranian forces have now held fire for three days running, the longest lull since strikes resumed in early July. Omani mediators used the opening to bring negotiators back to the table, aiming for a deal that reopens the Strait of Hormuz to normal traffic.
President Trump described the contacts as "good talks" and signaled he was open to a broader settlement. For a market that had priced in a closed strait and a widening war, even a tentative ceasefire was reason enough to sell.
Not quite peace
The selling runs ahead of the facts on the ground. Over the weekend, Houthi forces said they had hit two Saudi Aramco sites on the Red Sea coast, at Jizan and Yanbu, the same export route that pushed Brent over $100 days earlier. The embargo the group declared on Saudi shipping is still in place.
Crude also remains higher than where it began the month. Even after Tuesday's plunge, Brent sits above its early-July levels, a sign the market is pricing a pause rather than an ending.
What to watch
The next few days turn on whether the lull holds. A signed framework to reopen Hormuz would likely drag Brent back toward the $70s and close the book on the July spike. A single missile in the Gulf or the Red Sea could send it straight back up.
One thing is unlikely to move as fast: the pump. Diesel and jet fuel, still squeezed by war damage to refineries, are easing more slowly than crude, so drivers should not expect prices at the station to track the screen just yet.