US West Texas Intermediate (WTI) crude fell nearly $20 per barrel on Wednesday after President Donald Trump announced a two-week ceasefire with Iran.
The move comes amid escalating tensions over the Strait of Hormuz, through which 20% of global oil passes.
Trump claimed Iran offered a 10-point proposal, calling it a "workable basis" for negotiations. However, analysts say many uncertainties remain.
The decision marks a significant shift from earlier threats to attack Iranian civilian infrastructure.
This sudden pivot has sent oil prices tumbling, with WTI closing at $94.85 per barrel-its lowest since March 26.
The sharp drop reflects growing optimism that regional conflict may be de-escalating.