Oil prices sank around seven percent on Monday, the eve of crucial midterm elections in the United States, as signals that Tehran and Washington were renewing dialogue boosted hopes of ending the Middle East war.
Iran on Monday said "intensive" exchanges were underway with Washington and offered to reopen the Strait of Hormuz under strict conditions, as efforts escalated to avert a return to conflict.
Earlier, the Axios news outlet reported that US Vice President JD Vance had sent a letter to Iranian national security chief Mohsen Rezaei about possible new talks.
That was the highest-level move from the administration of US President Donald Trump in months.
"We believe the (Trump) signals may be tactical ahead of tomorrow's US midterm elections," noted Arne Lohmann Rasmussen, chief analyst at Global Risk Management.
"Meanwhile, attacks on shipping in the Strait of Hormuz continue (and) we maintain our higher-for-longer outlook for energy prices."
Nevertheless, share prices of energy majors dropped, while many other sectors were boosted by the cooling fuel costs.
Traders were also focused on Tuesday's midterms, with Democrats expecting to win at least partial control of Congress that would impose political constraints on Trump for the first time in two years.
The loss of total Republican dominance would push the president into unfamiliar and uncomfortable territory: a lame duck period beset with high inflation at home, the sputtering war against Iran and hostile Democratic investigations into his activities in Washington.
"Investors are bracing for a fresh round of turbulence ahead of US midterm election fireworks while they assess the extent that companies are burning through cash to keep the AI bonfires burning," said Susannah Streeter, chief investment strategist at Wealth Club.
Technology firms' share prices recovered modestly on Wall Street after Friday's sell-off, as more poorly received earnings from US titans fanned deepening concerns about the investment boom for artificial intelligence.
Results updates from Apple, which reports after the close of trading on Monday, as well as Advanced Micro Devices and software titan Palantir will be closely watched this week.
"With Apple starting things off, the earnings cadence will start with a bang, only we won't know until after the close if that 'bang' is a celebratory bang or a take-cover kind of bang," said analyst Patrick O'Hare at Briefing.com.
Shares in Apple were down one percent in late morning trading.
Concerns about the profitability of AI-related firms did not disappear altogether.
The share price of Japanese chipmaker Kioxia plunged nearly 16 percent on Monday after the company gave a cautious outlook that fell short of forecasts.
The company's stock has plunged about 70 percent from its record high set in June, though it is still up more than 200 percent since the start of the year.
Bitcoin and other cryptocurrencies were steadier after Friday's retreat triggered by the world's biggest crypto exchange Binance suffering the sector's largest hack, of more than $6 billion stolen.
Brent North Sea crude: DOWN 7.1 percent at $105.33 per barrel
West Texas Intermediate: DOWN 6.8 percent at $97.08 per barrel
New York - Dow: UP 1.0 percent at 52,306.43 points
New York - S&P 500: UP 0.6 percent at 7,626.07
New York - Nasdaq Composite: UP 0.7 percent at 25,618.34
London - FTSE 100: UP 0.3 percent at 10,761.33 (close)
Paris - CAC 40: UP 1.0 percent at 8,047.69 (close)
Frankfurt - DAX: UP 0.6 percent at 25,981.09 (close)
Tokyo - Nikkei 225: DOWN 0.3 percent at 63,081.86 (close)
Hong Kong - Hang Seng Index: UP 0.4 percent at 23,393.32 (close)
Shanghai - Composite: UP 1.1 percent at 3,638.03 (close)
Euro/dollar: UP at $1.1202 from $1.1168 on Friday
Pound/dollar: UP at $1.3419 from $1.3396
Dollar/yen: UP at 157.83 yen from 157.54 yen
Euro/pound: UP at 83.48 pence from 83.37 pence