EMEA crude futures dropped by 3% in after-hours trading on Wednesday after the White House dismissed as a "complete fabrication" an Iranian media report on the details of a framework deal.
Brent crude futures slipped 3.85% to $95.75 per barrel, while Murban oil futures retreated 3.76% to $91.48/bbl.
Saxo Bank strategists said in a note that Iran's reluctance to allow ships free passage via the Strait of Hormuz and President Trump's desire for Tehran to commit to handing over its enriched uranium are some of the contentious issues under discussion.
Though Iranian media reported on Wednesday that it had obtained an unofficial draft of an interim pact to end the Middle East, the White House called the reported memorandum of understanding "a complete fabrication."
Speaking during his Cabinet meeting on Wednesday, Trump said there's still work to be done to get a deal done, but he spoke with a measure of certainty that the two sides would get there.
"They want very much to make a deal," Trump said. "So far, they haven't gotten there. We're not satisfied with it, but we will be, either that or we'll have to just finish the job."
The report by Iranian media outweighed Tehran's earlier comments that the US had violated a ceasefire and a tanker on Tuesday, reporting an explosion off the Oman coast.
Earlier on Wednesday, an Iranian official reportedly said that indirect contacts with the US were ongoing and that the country's stockpile of enriched uranium was not on the agenda for talks.
Ali Bagheri, deputy secretary of Iran's Supreme National Security Council, said Iran's enriched uranium stockpile is not part of the current peace talks, and the two sides have not yet reached an agreement on the reopening of the Hormuz.
"Until we agree on all issues, we consider that we have not agreed on anything," Bagheri said.
For now, the strategic waterway remains effectively blocked by a dual blockade imposed by the US and Iran.
The US military has redirected 109 Iran-linked commercial vessels and disabled four others since imposing the blockade on April 13, the CENTCOM said on Wednesday.
US-Iran negotiations remain the key variable, with access likely to stay selective until a clearer framework for navigation is agreed, Kpler strategists said on Wednesday.
The International Energy Agency said in its May Oil Market Report that with Hormuz tanker traffic still restricted, cumulative supply losses from Arabian Gulf producers already exceed 1 billion barrels, with over 14 million barrels per day of oil now shut in.