Global oil prices fell sharply after signs of a pause in hostilities between the United States and Iran raised hopes of renewed diplomatic talks and eased concerns over global energy supplies.

Brent crude dropped more than 9%, falling below $88 per barrel, after the US said attacks on Iran had been suspended for a second consecutive night to allow room for negotiations. Iran also said it had halted retaliatory attacks in the region.

Oil prices had surged above $100 per barrel last week amid fears that the conflict and disruptions to shipping through the Strait of Hormuz would threaten global oil supplies.

Despite the decline, analysts cautioned that uncertainty remains high, warning that any breakdown in talks could trigger fresh volatility in energy markets. The conflict has already pushed up fuel costs globally, raising inflation concerns and reducing expectations of near-term interest rate cuts by major central banks.