Oil prices tumbled Tuesday, falling to around $77 per barrel during afternoon trading as markets pulled back from the sharp war-driven surge that pushed crude above $100 earlier in the week.

U.S. benchmark West Texas Intermediate crude dropped to roughly $77 a barrel by early afternoon, reversing much of Monday’s dramatic rally as traders reassessed the risk of prolonged supply disruptions from the escalating conflict in the Middle East, according to various news reports.

The steep decline came after oil markets surged on fears that fighting involving Iran could threaten shipments through the Strait of Hormuz, the world’s most important oil chokepoint. Roughly a fifth of global oil supplies pass through the narrow waterway linking the Persian Gulf with international markets.

But those fears eased somewhat Tuesday after signals that the conflict might not escalate further and that global powers could step in to stabilize energy supplies.

Oil had briefly surged above $100 per barrel on Monday, to $119.50, for the first time in years as traders rushed to price in the possibility that shipping through the strait could be disrupted.

By Tuesday, however, investors began unwinding some of those bets as the immediate threat to supply appeared less severe than initially feared.

Analysts say the dramatic swing highlights how sensitive oil markets have become to geopolitical developments in the Middle East.

“Oil markets are extremely reactive right now,” said one energy analyst. “Traders are trying to gauge whether this is a temporary shock or the start of a prolonged supply disruption.”

The sharp drop also reflects expectations that governments could move to calm markets by releasing oil from emergency reserves if necessary.

Officials from major economies have been discussing the possibility of tapping strategic petroleum reserves to offset any supply disruptions tied to the conflict. Such moves have been used before during major geopolitical crises to prevent sudden spikes in fuel prices.

Despite the pullback, analysts warn that oil markets could remain volatile in the coming weeks as tensions in the region continue to unfold.

Any escalation that threatens production or shipping routes in the Persian Gulf could quickly push prices higher again.

The price swings are already beginning to ripple through the broader economy.

Gasoline prices in the United States have surged in recent days as the earlier spike in crude oil filtered down to retail fuel markets. The national average price for gasoline climbed sharply over the past week as stations passed along higher wholesale costs.

If oil prices stabilize near current levels, analysts say the surge in gasoline prices could begin to ease in the coming weeks. But if tensions escalate again, consumers could face another round of increases at the pump.

The oil market’s rapid reversal underscores the uncertainty surrounding the geopolitical situation and its potential impact on global energy supplies.

For now, traders appear to be betting that the worst-case scenario for supply disruptions may be avoided.

Still, analysts caution that the situation remains fluid.

“Geopolitics can change quickly,” one market strategist said. “If tensions flare again, oil prices could move just as fast in the other direction.”