-- Crude prices declined Wednesday amid prospects of a diplomatic breakthrough between the US and Iran.
Brent tumbled 7.1% to $102.06 per barrel, having hit $96.75 earlier in the day. West Texas Intermediate crude futures were last down 6.7% at $95.44.
American and Iranian officials are close to a one-page memorandum of understanding to end the war and establish a framework for future nuclear negotiations, Axios reported Wednesday, citing sources.
The proposed MoU would include Iran committing to a moratorium on nuclear enrichment, with the US agreeing to ease sanctions and release frozen Iranian funds, according to the report. Both sides would lift restrictions on shipping through the Strait of Hormuz.
"A deal announcement would move futures further immediately, in fact even the potential of a deal is already triggering a decline in oil prices," Rystad Energy Chief Oil Analyst Paola Rodriguez-Masiu said in remarks emailed to.
The physical market's recovery won't be as quick as the futures market predicts, Rodriguez-Masiu said, pointing to a six-to-eight-week lag between the strait reopening and oil flows normalizing.
"Global markets should not mistake a ceasefire headline for a supply headline," Rodriguez-Masiu said.
US President Donald Trump said late Tuesday that he would pause "Project Freedom," an effort to guide ships through the Strait of Hormuz, citing "great progress" made toward a final agreement with Iran.
Trump, however, warned on Wednesday that Iran's failure to agree to a deal would trigger a powerful military operation.
The broader regional conflict paused following two separate ceasefires; one between Washington and Tehran and the other involving Israel and Lebanon.