Oil prices drop below $100 after reports US, Iran close to ending war

Oil prices plunged on Wednesday afternoon after news broke that the United States and Iran were nearing an initial peace deal.

Brent crude futures fell $10.07, or 9.2%, to $99.80 a barrel by 1042 GMT, while U.S. West Texas Intermediate lost $10.79, or 10.6%, to $91.48.

Both benchmarks were on track for their biggest daily declines in absolute terms in a month and hit their lowest in two weeks, having shed about 4% in the previous session.

Crude oil supply losses from halted marine traffic through the Strait of Hormuz since the war began in February have driven up prices, with Brent trading last week at its highest since March 2022.

The closure of the strait has resulted in a drawdown in global oil and fuel inventories as refineries try to offset production shortfalls.

U.S. crude oil inventories fell for a third week, while gasoline and distillate stocks also declined, market sources said on Tuesday, citing American Petroleum Institute figures.

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Meanwhile, the United States and Iran are closing in on an agreement on a one-page memorandum to end the war, a source from mediator Pakistan ​and another source briefed on the mediation said.

In an early morning social media post, U.S. President Donald Trump gave no details of any specific proposal but said the war could end if “Iran ‌agrees to give what has been agreed to”.

The proposed 14-point, one-page memorandum would formally end the war, followed by discussions to unblock shipping through the Strait of Hormuz, lift U.S. sanctions on Iran and agree curbs on Iran’s nuclear programme, the sources told Reuters.

“We will close this very soon. We are getting close,” said the source from Pakistan, which hosted the war’s only peace talks so far and has continued in that role of mediator, ferrying proposals between the sides.