Crude oil prices fell below $90 per barrel early on Tuesday for the first time since August, following renewed signals by United States President Donald Trump that further military strikes against Iran may not be necessary.
The international benchmark dropped to $89.70 per barrel in early European trading, while West Texas Intermediate (WTI), the US benchmark, also declined by more than two per cent to below $85 per barrel.
The latest decline followed reports that Trump was not considering an attack on Iran "at this point", raising hopes of a diplomatic breakthrough in the Middle East.
At the start of Asian trading, Brent had already fallen below $92 per barrel as investors responded to indications of possible de-escalation in the eight- month-old conflict.
Market optimism was also supported by diplomatic efforts reportedly mediated by Qatar, which could pave the way for an agreement between the parties.
However, concerns over energy supply disruptions remain, as Yemen's Houthi group continues attacks on Saudi Arabia's energy infrastructure.
The latest attack targeted the East-West pipeline, causing a limited fire that was subsequently extinguished, according to an official of the Saudi energy ministry.
Oil prices have extended their losses after recording a 17 per cent decline last week, their biggest weekly drop since the turbulent period of the COVID-19 pandemic in 2020.
Brent has now shed approximately 25 per cent from its late-October peak of above $117 per barrel.