Brent crude futures dropped toward $96 per barrel on Thursday. This price level represents a two-week low for the commodity. The movement extends a nearly 8% decline recorded during the previous session.
Markets are reacting to a U.S. proposal to end a two-month conflict with Iran. A successful agreement could reopen the Strait of Hormuz to global shipping. Iran is currently reviewing the de-escalation terms.
Diplomatic progress has erased the risk premium that previously held Brent above $120 per barrel. Falling energy costs boosted equity markets by cooling global inflation fears. Volatility is expected to persist as sensitive negotiations continue.