Singapore, May 27 (QNA) - Oil prices fell on Wednesday after a sharp rally in the previous session, as traders monitored developments in US-Iran negotiations amid renewed geopolitical tensions in the Middle East.

Brent crude futures dropped by $1.42, or 1.43%, to $98.16 a barrel, while US West Texas Intermediate (WTI) crude declined by $1.66, or 1.77%, to $92.23 a barrel.

The retreat followed a roughly 4% surge on Monday, when markets reacted to reports of fresh US military strikes inside Iran, which had disrupted earlier optimism over potential diplomatic progress between Washington and Tehran.

Investors remain focused on talks aimed at easing tensions and discussions linked to the possible reopening of the Strait of Hormuz, a critical global energy shipping route that carries a significant share of the world's oil and liquefied natural gas flows.

However, escalating military activity in the region has raised concerns about the durability of any diplomatic breakthroughs, with analysts warning that renewed hostilities could further disrupt supply chains.

Adding to regional uncertainty, Israeli airstrikes in Lebanon have also intensified, contributing to broader concerns about stability in key energy-producing areas. (QNA)