Global oil prices fell more than 7% over two trading sessions, with Brent crude falling to around $91 a barrel, while US West Texas Intermediate (WTI) fell to $85.20.
The sharp sell-off followed US President Donald Trump's announcement that further military strikes against Iran are not necessary for now, raising hopes for a de-escalation and easing fears of prolonged supply disruptions in the Middle East.
Brent has now lost about 22% from a peak of $118 on October 30, although Washington's naval blockade of the Strait of Hormuz remains in place and threats to regional shipping continue.