Oil prices settled lower by more than 3 per cent on Monday as supply concerns eased after US Vice President JD Vance said progress has been made in talks with Iran and the Strait of Hormuz was open.
Brent crude dropped $2.67 or 3.31 per cent to trade at $77.90 a barrel, while the US West Texas Intermediate (WTI) crude futures settled at $74.82 a barrel after shedding $1.78 or 2.32 per cent.
Prices had climbed after threats by US President Donald Trump to restart the Iran war, while Iran announced that it had again closed the Strait of Hormuz.
High-ranking American and Iranian officials wrapped up their first round of talks in Switzerland on Monday, continuing the discussions that began on Sunday under the terms of a memorandum of understanding reached last week to extend a tenuous ceasefire from April for at least another 60 days.
The US authorised Iranian oil sales on Monday. The general license, announced by the Treasury Department, allows the sale of crude oil, petrochemical and petroleum products of Iranian origin through August 21.
At least three supertankers, carrying a total of 6 million barrels of Iranian crude, moved to transit the Strait of Hormuz heading to Singapore early on Monday.
Amid lingering concerns over the Strait of Hormuz, Iran is rapidly pushing out crude supplies that accumulated after failing to circumvent US restrictions in recent months.
Reuters reported that Iran did not negotiate on its nuclear programme and did not accept any new commitments in Sunday’s talks with the US in Switzerland, citing an Iranian Foreign Ministry spokesperson.
More Middle East producers began to lift more oil, with the United Arab Emirates (UAE), Kuwait and Iraq offering more oil to customers in the past week.
In other producers like Saudi Arabia, crude oil exports from Saudi Arabia fell for a second straight month in April and hit a record low of 3.99 million barrels per day, compared with 4.974 million barrels per day in March.
Another producer under the Organisation of the Petroleum Exporting Countries (OPEC), Iraq, plans to restore crude production gradually to between 4.2 million barrels per day and 4.3 million barrels per day.