Meanwhile, India again vows to stop buying Russian oil in exchange for lower tariffs: File Image/Pixabay

The seesaw gains and losses pattern of recent oil trading - based mainly on geopolitical tensions - continued in spectacular fashion on Monday, with the commodity plummeting by almost 5 percent.

The drop occurred after U.S. president Donald Trump said Iran was "seriously talking" with Washington – suggesting that a military strike against the Islamic republic (which propelled oil to multi-month highs last week) may be averted.

As of 0325 GMT, Brent was down $2.81, or 4.1 percent, to $66.51 per barrel; at the end of the session, West Texas Intermediate fell by 4.7 percent to near $62 per barrel.

Another sign of hostilities de-escalation regarding Iran was that country's Revolutionary Guards, which reportedly had no plans to conduct live-fire exercises in the Strait of Hormuz, as many pundits feared; plus, White House envoy Steve Witkoff and Iranian foreign minister Abbas Araghchi agreed to meet in Istanbul on Friday,

But while those concerned more about averting war than oil prices breathed a sigh of relief, Capital Economics was on hand to remind everyone of the true state of the oil market; it wrote, "Geopolitical risks mask a fundamentally bearish oil market…the historical example of last year's 12-day war [between Israel and Iran], and a well-supplied oil market, will still bear down on Brent crude prices by end-2026."

Meanwhile, Haris Khurshid, chief investment officer at Karobaar Capita, attempted to explain https://financialpost.com/commodities/energy/oil-gas/oil-plunges-iran-risks-ease Monday's massive sell-off: "The move lower looks more like a positioning reset than a fundamental shift.

"With no new supply shock, oil is giving back some risk premium as the market recalibrates after pricing in near-term disruption that just didn't materialize."

In other oil news on Monday, Trump announced he would reduce tariffs on Indian goods after India prime minister Narendra Modi agreed to replace his country's Russian crude imports with oil from Venezuela and the United States.

But media pointed out that it was unclear how long the transition would take, given Venezuela's dilapidated infrastructure and the fact India buys more oil from Russia than Venezuela produces; also, Russian oil has traded at a significant discount – roughly $16 per barrel – compared to other sources of crude, making it a challenge for India to quit.