Oil prices plunged around 6% on Tuesday as intensified diplomatic efforts between the US and Iran raised hopes for an agreement to reopen the Strait of Hormuz, easing concerns over potential supply disruptions.
International benchmark Brent crude futures fell to around $79 per barrel as of 1550GMT, down about 5.7% from the previous close of $83.77. The benchmark dropped below $80 for the first time since July 13.
US benchmark West Texas Intermediate (WTI) declined about 5.9% to $75.60 per barrel from its previous close of $80.34.
US Treasury Secretary Scott Bessent said Washington and Tehran were continuing negotiations and could reach an agreement as early as Tuesday or Wednesday to reopen the strategic waterway.
"We are in talks with the Iranians," Bessent told CNBC. "There is a chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict."
Iranian Foreign Ministry spokesman Esmaeil Baghaei, however, said Tehran was not holding direct negotiations with Washington, adding that discussions through Omani mediation focused on securing the safe passage of commercial vessels.
Qatar also said it remains in contact with both sides and that a proposed de-escalation plan is being circulated, although no clear timetable for an agreement had been established.
Expectations of a possible ceasefire and the restoration of shipping through the strait reduced the geopolitical risk premium that had driven oil prices sharply higher in July.
Oil prices also came under pressure from OPEC+'s decision to proceed with a planned production increase of 188,000 barrels per day in September.
