The S&P/ASX200 was up by 38.6 points by midday on Monday, lifting 0.44 per cent to 8,695, as the broader All Ordinaries improved by 38.8 points, or 0.44 per cent, to 8,916.
Hopes of a lasting truce between the US and Iran have been further bolstered by news that a handful of oil and gas tankers have exited the Strait of Hormuz - some after being stranded for nearly three months.
"Over the weekend, President Trump and his administration implied an initial deal with Iran is near, though a number of points are still to be settled, and it is clear the US and Iran have differing views on hard 'red lines'," Westpac economist Ryan Wells said.
"There are early signs that risk sentiment remains supported, early Sydney trade revealing a broad-based sell-off in the US dollar, with 'riskier' currencies like the Australian dollar benefiting as a result."
Brent crude prices tumbled below $US97 a barrel at the open, down from around $US112 at the same time the previous week.
ASX-listed energy stocks have slumped 2.3 per cent, with Woodside, Santos and refinery operators Ampol and Viva under pressure, while coal producers and uranium stocks have advanced.
Miners helped push the bourse in the other direction, with basic materials stocks charging 1.8 per cent higher, led by a strong rebound in gold stocks.
The precious metal firmed to $US4,652 ($A6,490) an ounce, as the gold sub-index surged by almost four per cent.
Mega miners Fortescue and Rio Tinto gained 1.5 per cent or more, while BHP traded 1.1 per cent higher to $60.42, tracking with a lift in iron ore futures.
The heavyweight financials sector was sluggish, losing 0.3 per cent as Westpac, NAB and ANZ made modest advances and Commonwealth Bank shares edged lower.
Real estate trusts gained more than one per cent, buoyed by improving sentiment and a 5.5 per cent rally in Charter Hall on the back of an earnings upgrade.
Industrials jumped 0.6 per cent, led by more than four and six per cent uplifts in Qantas and Virgin Australia shares, as investors leaned into hopes around the easing of Persian Gulf tensions.
Consumer-facing stocks also improved, with staples up 0.5 per cent and cyclicals rising 0.3 per cent.
In company news, Guzman y Gomez shares spiked at the open before easing to a 0.9 per cent boost, after ending up 10 per cent on Friday on the well-received announcement that it was exiting the US market.
Looking ahead, April inflation data due Wednesday will help traders assess the impact of the energy crisis on local price growth ahead of the Reserve Bank's mid-June meeting on monetary policy.
The Australian dollar was buying 71.66 US cents, up from 71.36 US cents on Friday at 5pm, buoyed by improving risk sentiment and commodity prices.
