Oil Prices Fall as U.S. and Iran Near Deal to Reopen Strait of Hormuz

Oil prices fell sharply on Monday as negotiators from the United States and Iran reported progress toward a deal that would reopen the Strait of Hormuz and end the conflict that began on 28 February. Brent crude, the global benchmark, dropped 5.5 percent to $97.90 a barrel in early trading before settling near $97.70.

The decline followed statements from both sides indicating that a large portion of issues under discussion had been resolved.

Negotiations Advance U.S.

Secretary of State Marco Rubio said negotiators had a "pretty solid thing on the table" and that an agreement might be reached on Monday.

The Strait of Hormuz, through which roughly one-fifth of the world's oil and liquefied natural gas normally passes, has been closed since the conflict began. Trump previously said any agreement would include reopening the waterway. He estimated it could take months before normal traffic resumes.

The Nikkei 225 index in Japan rose above 65,000 for the first time after gaining 3 percent on hopes the strait would reopen. Japan and South Korea rely heavily on energy supplies from the Gulf. Trump said he had discussed a "Memorandum of Understanding pertaining to PEACE" with leaders of Saudi Arabia, the United Arab Emirates, Qatar, Turkey, and Egypt.

He also reported a "very good call" with Israeli Prime Minister Benjamin Netanyahu. A ceasefire was reached in early April, after which Washington and Tehran began talks on a longer-term settlement. Crude prices remain well above the roughly $70 level seen before the conflict started.