Crude prices slid in Asian trading as cautious optimism grew over breakthrough talks between the United States and Iran, easing fears of a prolonged supply shock from the Middle East.

Benchmark Brent futures fell more than one per cent, while US marker West Texas Intermediate also edged lower, after mediators Pakistan and Qatar reported “major progress” in negotiations held in Switzerland. The talks, led by US Vice President JD Vance and Iranian parliamentary speaker Mohammad Bagher Ghalibaf, are aimed at defusing tensions that had driven oil to recent highs.

The discussions follow a pause in hostilities between the US and Iran, whose confrontation had been amplified by fighting between Israel and Hezbollah. That conflict had threatened to spill across the region, rattling energy markets and reigniting global inflation worries.

Initial nerves resurfaced when reports suggested Tehran had walked away from the table after US President Donald Trump warned of further strikes if Hezbollah attacks continued. But mediators later confirmed the delegations met in what they described as a “positive and constructive atmosphere.”

Central to the talks is reopening the Strait of Hormuz, the narrow chokepoint through which roughly a fifth of the world’s oil and gas shipments pass. Pakistan and Qatar said Washington and Tehran had agreed to establish a direct communication line to prevent incidents in the waterway and endorsed a “roadmap” toward a comprehensive deal within 60 days, including follow-on technical negotiations.

Iranian Foreign Minister Abbas Araghchi said on X that mediation efforts had delivered “major progress to end the Lebanon War,” further bolstering hopes that regional risks to supply could recede.

The easing of crude prices fed into a mixed session for global equities. Tech-heavy markets in Tokyo, Seoul and Taipei advanced, with additional gains in Shanghai, Mumbai and Bangkok. By contrast, Hong Kong, Sydney, Singapore, Wellington, Manila and Jakarta slipped, reflecting lingering caution over the fragile geopolitical backdrop.

European bourses in London, Paris and Frankfurt opened slightly higher, supported by the softer oil price and expectations that a sustained de-escalation in the Gulf could relieve pressure on central banks battling inflation.

Analysts warned, however, that the pullback in crude may prove temporary. Skye Masters of National Australia Bank said investors were likely to remain wary while the Middle East situation “remains fragile,” noting that at current levels “the risk is for a lift higher” in oil if talks falter or violence resumes.